JP Morgan: Grayscale GBTC is less liquid than BlackRock and Fidelity’s Bitcoin spot ETFs

The U.S. Securities and Exchange Commission (SEC) approved 11 Bitcoin spot ETFs last month, a news that attracted widespread market attention. Among them, GBTC, owned by Grayscale, has been attracting attention due to the huge selling pressure.

According to the latest report from JP Morgan analysts, the Bitcoin spot ETFs owned by BlackRock and Fidelity have surpassed Grayscale’s GBTC in at least two liquidity indicators.

Two indicators show low GBTC liquidity in Grayscale

In the report, the analyst team led by Nikolaos Panigirtzoglou noted that they used the Hui-Heubel ratio as the first indicator to Measure the breadth of the market. Through a comparison of the Hui-Heubel ratio, they found that the ETFs of BlackRock and Fidelity were approximately four times lower than GBTC, which means that the ETFs of BlackRock and Fidelity were significantly better than GBTC in terms of market breadth.

The quality of market liquidity can be measured by the Hui-Heubel ratio. A lower Hui-Heubel ratio indicates better market liquidity, as price changes have less impact on trading volume. On the contrary, a higher Hui-Heubel ratio means that the market is less liquid and price fluctuations have a greater impact on trading volume.

The second indicator is based on measuring the average difference between an ETF's closing price and its net asset value (NAV). According to this metric, the gap between BlackRock and Fidelity ETF prices and NAV in the latest week was close to that of the SPDR Gold ETF, indicating a significant improvement in liquidity. However, GBTC has a larger gap, showing poorer liquidity levels.

The analysts further pointed out that although these two indicators do not fully cover all aspects of market liquidity, especially market depth, there is evidence that BlackRock and Fidelity’s Bitcoin spot ETFs are competing with In terms of indicators related to market breadth, it has more advantages than Grayscale’s GBTC.

Finally, analysts pointed out that if GBTC’s management fees are not reduced, Grayscale may face larger capital outflows, and funds may flow to other ETF issuers, especially BlackRock and Fidelity.

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