BlackRock, Fidelity Bitcoin ETFs Have a Liquidity Edge Over Grayscale

 

• 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.

According to a recent JPMorgan research report, there are indications that BlackRock and Fidelity's spot Bitcoin exchange-traded funds (ETFs) have a competitive edge over Grayscale, particularly regarding liquidity metrics related to market breadth. The report suggests that even though outflows from Grayscale's GBTC slowed after SEC approval, the fund may struggle against the newly established ETFs, especially those from BlackRock and Fidelity unless it significantly reduces its fees.

Despite lowering its management fee from 2% to 1.5% during its conversion to a spot Bitcoin ETF, Grayscale still maintains higher fees than its counterparts. The report highlights two liquidity metrics where BlackRock and Fidelity ETFs outperform GBTC. 

Firstly, based on the Hui-Heubel ratio, BlackRock and Fidelity ETFs demonstrate significantly more market breadth than GBTC. Secondly, the "average absolute deviation" of ETF closing prices from net asset value (NAV) indicates improved liquidity for BlackRock and Fidelity ETFs compared to GBTC.

Grayscale contested the report's findings, emphasizing that in terms of dollar volume traded, a widely used metric for tracking ETF liquidity, GBTC has been the market leader in liquidity since its launch as a spot Bitcoin ETF.