Blackrock, Fidelity Bitcoin ETFs Have a Liquidity Edge Over Grayscale: JPMorgan

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8 Feb 2024

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Blackrock, Fidelity Bitcoin ETFs Have a Liquidity Edge Over Grayscale: JPMorgan
GBTC is expected to lose further funds to newly created ETFs unless there is a meaningful cut to its fees, the report said.
By Will Canny
Feb 8, 2024 at 3:17 p.m.
Updated Feb 8, 2024 at 3:19 p.m.

Grayscale's GBTC has lower liquidity than some rival bitcoin ETFs. (roegger/Pixabay)

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Outflows from GBTC slowed during the fourth week following SEC approval.
Still, GBTC is likely to lose more funds to newly created spot bitcoin ETFs if it doesn’t cut its fees.
The Blackrock and Fidelity ETFs also have an advantage over Grayscale when it comes to certain liquidity metrics linked to market breadth.

There is evidence the Blackrock (BLK) and Fidelity spot bitcoin (BTC) exchange-traded funds (ETFs) already have an advantage over Grayscale when it comes to certain liquidity metrics linked to market breadth, JPMorgan (JPM) said in a research report Wednesday.
Even though outflows from Grayscale’s GBTC slowed in the fourth week following approval by the U.S. Securities and Exchange Commission (SEC), the fund is expected to lose out to the newly created ETFs, and in particular to the Blackrock and Fidelity products, if it doesn't make a meaningful cut to its fees, the report said.

Grayscale charges the most among spot bitcoin ETF issuers. It dropped its 2% management fee to 1.5% as part of its conversion to a spot bitcoin ETF, but is still much more expensive than rival offerings.
“An additional reason beyond fees is that the Blackrock and Fidelity ETFs are already commanding an advantage vs GBTC in terms of two liquidity metrics,” analysts led by Nikolaos Panigirtzoglou wrote.
The first is the bank’s proxy for market breadth based on the Hui-Heubel ratio. The value for GBTC is about four times higher than those of Blackrock and Fidelity ETFs, implying they “exhibit significantly more market breadth than GBTC.”

The second metric is based on the “average absolute deviation” of ETF closing prices from net asset value (NAV), the report said.
In the last week this metric showed the “ETF price deviation from NAV of the Fidelity and Blackrock spot bitcoin ETFs approached that of the GLD Gold ETF, implying a significant improvement in liquidity, while the deviations for the GBTC ETF have remained high implying lower liquidity,” the report added.
STORY CONTINUES BELOW

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Read more: Grayscale’s GBTC Profit Taking Likely Over, Easing Bitcoin Selling Pressure: JPMorgan
Edited by Sheldon Reback.
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The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.
Will Canny
Will Canny is CoinDesk's finance reporter.
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The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is an award-winning media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. In November 2023, CoinDesk was acquired by Bullish group, owner of Bullish, a regulated, institutional digital assets exchange. Bullish group is majority owned by Block.one; both groups have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary, and an editorial committee, chaired by a former editor-in-chief of The Wall Street Journal, is being formed to support journalistic integrity.
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