Morgan Stanley analysts have stated that the Bitcoin spot ETFs offered by BlackRock and Fidelity are superior to Grayscale’s GBTC in at least two liquidity indicators.
Background: GBTC saw outflows of $180 million yesterday, marking an eight-day decline, and Grayscale’s Bitcoin holdings fell below 482,000 BTC.
After the U.S. Securities and Exchange Commission (SEC) approved 11 Bitcoin spot ETFs last month, Grayscale’s GBTC has continued to face attention due to its significant selling pressure. However, analysts at Morgan Stanley have pointed out in their latest report that BlackRock and Fidelity’s Bitcoin spot ETFs have outperformed GBTC in at least two liquidity indicators.
The two indicators show lower liquidity for GBTC. The analyst team led by Nikolaos Panigirtzoglou stated in the report that 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 that the market breadth of these two ETFs is significantly better than GBTC.
Note: A lower Hui-Heubel ratio indicates better market liquidity, as price fluctuations have less impact on trading volume, while a higher Hui-Heubel ratio suggests poorer market liquidity, with price fluctuations having a greater impact on trading volume.
The second indicator is based on the average difference between the ETF closing price and its net asset value (NAV). This indicator shows that the price-NAV difference for BlackRock and Fidelity’s ETFs in the past week is similar to that of the SPDR Gold ETF, indicating a significant improvement in liquidity. On the other hand, GBTC’s calculated value is at a higher level, indicating poorer liquidity.
The analysts further noted that although these two indicators do not cover all dimensions of market liquidity, particularly market depth, existing evidence suggests that BlackRock and Fidelity’s Bitcoin spot ETFs have an advantage over Grayscale’s GBTC in liquidity-related indicators.
Finally, the analysts also stated that if GBTC does not reduce its management fees, Grayscale may face larger-scale outflows of funds, which may then flow into other ETF issuers, especially BlackRock and Fidelity.
Further reading:
Glassnode Weekly Report: GBTC Continues Bitcoin Selling Pressure, but Capital Inflows Accelerate.
Related Reports:
How to Pay Taxes for Investing in Bitcoin Spot ETFs? Pay Attention to These Two Points.
How Can Taiwanese Investors Purchase Bitcoin Spot ETFs? A Three-Step Guide.
Nasdaq Survey: 72% of Financial Advisors are Interested in Investing in Bitcoin Spot ETFs.