Morgan Stanley analysts stated that the Bitcoin spot ETFs under BlackRock and Fidelity are superior to Grayscale’s GBTC in at least two liquidity indicators.
After the U.S. Securities and Exchange Commission (SEC) approved 11 Bitcoin spot ETFs last month, Grayscale’s GBTC has been under scrutiny due to its significant selling pressure. However, according to the latest report from Morgan Stanley analysts, the Bitcoin spot ETFs under BlackRock and Fidelity have surpassed GBTC in at least two liquidity indicators.
The report, led by analyst Nikolaos Panigirtzoglou, highlights two indicators that indicate lower liquidity for GBTC. The first indicator is based on the Hui-Heubel ratio, which measures market breadth. The Hui-Heubel ratio for BlackRock and Fidelity’s ETFs is approximately four times lower than GBTC, indicating a significantly better market breadth for these two ETFs.
Note: A lower Hui-Heubel ratio indicates better market liquidity, as price fluctuations have a smaller impact on trading volume, whereas a higher Hui-Heubel ratio suggests poorer market liquidity, with price volatility having a greater impact on trading volume.
The second indicator is based on the average difference between the closing price of the ETF and its net asset value (NAV). This indicator shows that the price-NAV difference for BlackRock and Fidelity’s ETFs has approached that of the SPDR Gold ETF in the past week, indicating a significant improvement in liquidity. On the other hand, the calculated value for GBTC is at a higher level, indicating poorer liquidity.
The analysts further point out that while these two indicators do not cover all dimensions of market liquidity, especially market depth, existing evidence suggests that BlackRock and Fidelity’s Bitcoin spot ETFs have an advantage over Grayscale’s GBTC in indicators related to market breadth.
Finally, the analysts state that if GBTC’s management fees are not reduced, Grayscale may face larger-scale outflows of funds, which would then flow towards other ETF issuers, particularly BlackRock and Fidelity.
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