A significant number of Grayscale Bitcoin Trust (GBTC) shares have been bought in the secondary market this year at a deep discount to net asset value (NAV) in anticipation the trust’s conversion to an exchange-traded fund (ETF) will be approved by the U.S. Securities and Exchange Commission (SEC), JPMorgan (JPM) said in a research report Thursday.

The bank estimates a net $2.5 billion has flowed into GBTC since the start of the year, increasing to $2.7 billion if adding the covering of short interest.

“Assuming this buying flow was mostly speculative in anticipation of GBTC being converted to an ETF, then it is likely that this $2.7b would come out of GBTC as these investors take profit once GBTC gets converted,” analysts led by Nikolaos Panigirtzoglou wrote.

“If this $2.7b exits completely the bitcoin space then such an outflow would of course put severe downward pressure on bitcoin prices,” the authors wrote. “If instead most of this $2.7b shift into other bitcoin instruments such as the newly created spot bitcoin ETFs post SEC approval, which is our best guess, then any negative market impact would be more modest.”

Still, the “balance of risks for bitcoin prices is skewed to the downside in our opinion as some of this $2.7b is likely to completely exit the bitcoin space,” the bank said.

Much more than $2.7 billion could leave GBTC if its fee is not lowered aggressively after conversion into an ETF, the report added.

Grayscale Grayscale Bitcoin Trust Bitcoin ETF

Will Canny

Will Canny is an experienced market reporter with a demonstrated history of working in the financial services industry. He's now covering the crypto beat as a finance reporter at CoinDesk. He owns more than $1,000 of SOL.