JP Morgan provided an analysis of the ownership structure of spot Bitcoin ETFs, revealing that institutional ownership is around 13% based on recent 13F filings for Q1 2023.
Factoring in additional institutional investors not required to apply, such as junior managers and some investment advisors, the institutional ownership estimate rises to approximately 20%. This leaves retail investor ownership at around 80%, indicating that most of the new spot Bitcoin ETFs have been purchased by retail investors since their inception.
Hedge funds represent the bulk of institutional ownership, approaching 8%. Among the new spot Bitcoin ETFs, Blackrock's (NYSE:) IBIT has distinguished itself for several reasons.
First, it has received the majority of inflows since launch, becoming the main recipient of capital shifting away from the Grayscale Bitcoin Trust, known for its high fees. Second, IBIT is on the verge of overtaking Grayscale Bitcoin Trust as the world's largest Bitcoin fund. Third, it has become the most liquid Bitcoin ETF on the market.
IBIT's liquidity assessments use two main metrics. The first is the Hoey-Huppel ratio, which measures market breadth or the sensitivity of prices to trading volumes. A lower Hui-Heubel ratio indicates greater market breadth, and Blackrock's ETF has a much lower ratio compared to Grayscale's GBTC, about three to four times, indicating that it shows much greater market breadth.
The second measure looks at the average deviation of ETFs' closing prices from their net asset value (NAV). Low Deviation Indicates High Liquidity The Blackrock Spot Bitcoin ETF has shown much lower ETF price deviation from NAV than both Grayscale's GBTC and Fidelity's FBTC in the last week, indicating higher liquidity.
In conclusion, JPMorgan's analysis indicates that Blackrock's IBIT has already established itself as the most liquid Bitcoin ETF, outperforming Grayscale. This may increase its attractiveness to both institutional and retail investors in the future.
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