According to a report by JPMorgan, BlackRock and Fidelity’s spot bitcoin exchange-traded funds (ETFs) have already demonstrated superior liquidity metrics compared to Grayscale Bitcoin Trust (GBTC), the largest fund by assets under management.
JPMorgan’s analysis focuses on two key liquidity metrics. Firstly, the Hui-Heubel ratio, a proxy for market breadth, indicates that BlackRock and Fidelity ETFs exhibit approximately four times more market breadth than GBTC. This suggests a broader market participation for the former two ETFs.
Secondly, the analysis measures the deviation of ETF closing prices from their net asset value (NAV). It reveals that the price deviation from NAV for Fidelity and BlackRock’s bitcoin ETFs has approached that of the SPDR Gold Shares ETF, signaling a significant improvement in liquidity. Conversely, GBTC ETF has maintained higher deviations, indicating lower liquidity levels.
While acknowledging that these metrics do not encompass all aspects of market liquidity, particularly market depth, the report underscores the advantage of BlackRock and Fidelity’s bitcoin ETFs in certain liquidity measures related to market breadth.
The report further suggests that unless GBTC reduces its fees, it may experience further outflows, losing funds to competing ETFs, particularly those offered by BlackRock and Fidelity. This assessment underscores the growing competition and changing dynamics within the bitcoin ETF market.
