Selling pressure in bitcoin (BTC), the world’s largest cryptocurrency, from investors taking profits in crypto investment vehicle, the Grayscale Bitcoin Trust (GBTC), may be largely over, JPMorgan (JPM) said in a research report on Thursday.

The bank notes that bitcoin has dropped over 20% in the two weeks following the launch of spot bitcoin exchange-traded funds (ETFs) in the U.S., and said profit-taking in GBTC by investors who had bought the fund at a discount was a main driver behind the correction.

Before its conversion to an ETF, GBTC was one of the few ways for investors in the U.S. to gain exposure to bitcoin without owning the underlying cryptocurrency. It's still the largest bitcoin investment product with over $20 billion in assets under management.

JPMorgan had previously estimated an outflow of around $3 billion from GBTC due to profit taking from the ‘discount to net asset value’ (NAV) trade. These flows are significant, as when investors take profits on this trade, money leaves the crypto market, putting downward pressure on bitcoin’s price.

“Given $4.3b has come out already from GBTC, we conclude that GBTC profit taking has largely happened already,” analysts led by Nikolaos Panigirtzoglou wrote, adding that “this would imply that most of the downward pressure on bitcoin from that channel should be largely behind us.”

The bank’s estimates imply that about $1.3 billion has moved from GBTC to newly created spot bitcoin ETFs, which are cheaper. This is equivalent to a monthly outflow of $3 billion. These outflows are likely to continue if Grayscale is too slow to lower its fees and could even accelerate if other spot ETFs “reach critical mass to start competing with GBTC in terms of size and liquidity,” the report added.

Crypto exchange FTX’s bankruptcy estate also dumped around $1 billion worth of GBTC since its conversion to an ETF, resulting in added selling pressure on the underlying digital asset, a CoinDesk report showed.

Grayscale GBTC JPMorgan 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.