JPMorgan study shows that BlackRock and Fidelity’s Bitcoin ETFs outperform Grayscale’s Bitcoin Trust in liquidity metrics. BlackRock’s iShares Bitcoin Trust and Fidelity Wise Origin Bitcoin Fund have shown superior market depth indicators. Despite the outflow of $6 billion, Grayscale’s fund remains the largest with $21 billion in BTC, followed by BlackRock and Fidelity.

JPMorgan’s study reveals that BlackRock and Fidelity Investments’ spot Bitcoin exchange-traded funds (ETFs) have come out on top in liquidity metrics, surpassing the well-established Grayscale Bitcoin Trust (GBTC).

This revelation comes as the market has witnessed intense competition for investor attention among ETF issuers.

Bitcoin Spot ETF: BlackRock and Fidelity Acquire Grayscale

BlackRock’s iShares Bitcoin Trust (IBIT) and Fidelity Wise Origin Bitcoin Fund (FBTC), both newcomers to the arena, have outperformed liquidity assessments. JPMorgan strategists used the Hui-Heubel ratio for this analysis, which measures how market prices react to trading volumes.

It also compares the closing prices of ETFs with their net asset values. The results suggest that BlackRock and Fidelity’s offerings are more adept at maintaining price stability in response to trading, a key indicator of market depth.

Specifically, the Hui-Heubel liquidity ratio for these Bitcoin ETFs was significantly lower, indicating greater market breadth. This aspect is crucial for investors seeking reliable and efficient execution of trades without causing substantial price disruptions.

“We find evidence that the BlackRock and Fidelity Bitcoin ETFs already have an advantage over the Grayscale Bitcoin Trust on certain liquidity metrics related to market breadth,” JPMorgan analysts said.

Although capital outflows from Grayscale’s GBTC slowed in the fourth week following approval by the US Securities and Exchange Commission, the fund is expected to lose to newly created ETFs, and in particular against BlackRock and Fidelity products, if it does not achieve a significant cut in its fees, according to the report.

IBIT Overtakes GBTC in Trading Volume

Amid the liquidity comparison, IBIT on Thursday became the first Bitcoin spot ETF to surpass GBTC in terms of trading volume. According to Bloomberg Terminal, GBTC recorded a trading volume of $290.7 million, while IBIT’s trading volume recorded $301 million.

“Normally it takes 5-10yrs for a newborn to get even close to toppling a category’s liquidity king(s). $IBIT did it in under a month- trading more than both $GBTC and $BITO today. They’ll all go back and forth for a bit each day but over time the gap will grow.,” said Bloomberg analyst Eric Balchunas.

Despite growing competition, Grayscale’s Bitcoin Trust remains a formidable player. Grayscale ETF Vice President Louis Hsu highlighted GBTC’s dominant position since its inception as a spot Bitcoin ETF.

Grayscale Defends Its Bitcoin Spot ETF Fees

On the other hand, Grayscale CEO Michael Sonnenshein defended the higher fee structure, attributing it to the company’s specialized experience and track record in the cryptocurrency market.

Sonnenshein’s perspective goes beyond immediate liquidity benefits. This, considering the long-term viability of the proliferation of Bitcoin ETFs. He speculates that only a few of these Bitcoin ETFs will survive. The CEO of Grayscale dared to point out that the majority of Bitcoin spot ETFs could leave the market due to insufficient investor interest.

Since its launch, new entrants, including BlackRock and Fidelity ETFs, have attracted $8 billion. The above, in net inflows, while Grayscale has recorded an outflow of $6 billion.

Despite this change, Grayscale’s fund remains the largest, with $21 billion in assets. The above, followed by BlackRock and Fidelity, with 3.4 billion and 2.9 billion, respectively.

By Audy Castaneda


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