BlackRock and Fidelity Bitcoin ETFs Outperform Grayscale in Liquidity Metrics, JPMorgan Finds

According to a recent report by JPMorgan analysts, BlackRock and Fidelity’s spot bitcoin exchange-traded funds (ETFs) are gaining an edge over the Grayscale Bitcoin Trust (GBTC) in terms of liquidity metrics.

The analysis highlights two key liquidity metrics where BlackRock and Fidelity’s ETFs excel compared to GBTC. Firstly, JPMorgan’s proxy for market breadth, known as the Hui-Heubel ratio, is notably lower for BlackRock and Fidelity ETFs by approximately four times. This indicates a significantly broader market participation for these ETFs compared to GBTC.

Secondly, the deviation of ETF closing prices from their net asset value (NAV) on average is another metric where BlackRock and Fidelity’s ETFs exhibit improvement. Recent data suggests that the deviation of ETF prices from NAV for these two funds approaches levels seen in established ETFs like the SPDR Gold Shares ETF. Conversely, GBTC’s deviation remains higher, indicating lower liquidity.

Although these metrics don’t encompass all aspects of market liquidity, the evidence suggests that BlackRock and Fidelity’s bitcoin ETFs possess advantages over GBTC in specific liquidity metrics related to market breadth.

The report also raises concerns about the potential outflows from GBTC if its fees aren’t reduced. Analysts predict that investors may increasingly opt for other ETFs, particularly those offered by BlackRock and Fidelity, leading to a loss of funds for GBTC.

In summary, as the competition in the bitcoin ETF market intensifies, BlackRock and Fidelity’s offerings seem to be gaining traction due to their superior liquidity metrics, potentially posing a challenge to GBTC’s dominance in the space.

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