Crypto Analyst JPMorgan Unveil Predictions on Bitcoin (BTC) Price Decline: What Lies Ahead?

JPMorgan cautions that Bitcoin’s price may experience further decline if investors in the Grayscale Bitcoin Trust (GBTC) continue profit-taking. Following GBTC’s conversion into a spot Bitcoin Spot ETF, it has witnessed outflows exceeding $1.5 billion.

Last week, JPMorgan predicted a potential $3 billion outflow from GBTC, attributing it to speculative investors capitalizing on profits. Analysts, led by Nikolaos Panigirtzoglou, conveyed this warning in a recent note.

GBTC investors, who strategically acquired shares of the GBTC fund at a substantial discount to its net asset value in anticipation of a potential ETF conversion, have opted to exit the Bitcoin market entirely instead of transitioning to more cost-effective spot Bitcoin ETFs, ensuring maximum profits post-ETF conversion. Analysts highlight that the outflows from GBTC have prompted a reassessment of the fund’s fees, with the consensus being that the existing 1.5% fee is deemed excessive in comparison to other spot Bitcoin ETFs.

Analysts observed that GBTC presents a heightened “outflow risk” for certain institutional investors, with fees being just one factor in the decision to shift to more economical spot Bitcoin ETFs.”

While liquidity and market depth are crucial, there’s also a risk for GBTC in this regard if other spot Bitcoin ETFs achieve critical size and liquidity,” noted analysts, emphasizing that GBTC might face an additional outflow of $5 billion to $10 billion if it loses its liquidity advantage.

JPMorgan analysts expressed sympathy for arguments supporting Ethereum’s potential approval but remained skeptical that the SEC would classify Ethereum as a commodity by May. They pointed out that Ethereum’s shift to proof-of-stake and its impact on decentralization could align it more closely with cryptocurrencies deemed securities by the SEC.

Furthermore, ongoing SEC lawsuits against crypto exchanges offering staking services for proof-of-stake blockchains, including Ethereum, create additional hurdles for Ethereum ETF approval, at least until these legal matters are resolved, according to analysts.

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