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<ul class="summary-list"><li>A large swath of <keyword id="10357565" type="UNKNOWN" weightage="60" keywordseo="grayscale-bitcoin-trust">Grayscale Bitcoin Trust</keyword> could hit secondary <keyword id="31671" type="CITY" weightage="100" keywordseo="markets">markets</keyword> in July as six-month share lockups expire. </li><li>JPMorgan anticipates the lockup expirations will cause downward pressure on <keyword id="6354947" type="UNKNOWN" weightage="60" keywordseo="bitcoin">bitcoin</keyword>'s price.</li><li id="recirc"><a href="https://www.businessinsider.com/?hprecirc-bullet"></a>Other crypto experts say the hotly-anticipated lockup expiration may not create as much volatility as expected.</li></ul>A swath of shares in <a href="https://markets.businessinsider.com/etfs/grayscale-bitcoin-trust-btc-us3896371099">Grayscale Bitcoin Trust</a> worth nearly 40,000 bitcoins will unlock in July in a hotly anticipated lockup expiration for the world's largest bitcoin fund.Due to the nature of the <keyword id="11050925" type="UNKNOWN" weightage="60" keywordseo="grayscale-bitcoin">Grayscale Bitcoin</keyword> Trust, institutional investors who buy the fund directly must hold the shares for six months before selling on the secondary market.Many lockup periods are ending in July, and with 650,000 bitcoins in the trust, roughly 5% of the fund could be sold in the span of a few weeks. With Grayscale as the largest bitcoin fund, some investors may be worried a GBTC sell-off will exert downward pressure on GBTC and bitcoin prices more generallyJuly 17 is one of the largest days of the unlock period, with 16,240 bitcoin worth of GBTC becoming available to trade, according to Bybt.com.Here's 4 crypto experts on how the unlock will affect the bitcoin market. <h3>Kraken Intelligence:</h3> Researchers from Kraken Intelligence noted that the lockup expiration could potentially provide upside pressure on GBTC prices and on bitcoin."Large institutions make up a sizable proportion of the GBTC owners who'll have their shares unlocked this month. As most likely bought to profit from the Grayscale Premium - the once-hefty, and lucrative, disparity between the fund's net asset value and spot price - they also likely shorted bitcoin in the spot and futures market so as not to be inadvertently impacted by price volatility," the researchers said. If institutions decide to unwind their positions, they will have to buy bitcoin from the spot market to cover the GBTC. This could potentially result in the unlocking giving a boost to bitcoin, Kraken said.<h3>JPMorgan</h3>In June, JPMorgan noted that the GBTC share sale is a "headwind" for bitcoin. "As a reminder to our readers, last December and last January had seen the highest monthly inflows into GBTC, of $2bn and $1.7bn, respectively, reflecting to a significant extent GBTC premium monetization trades by hedge funds and other investors. As the six-month lock up period expires in June and July these investors are likely to sell at least some of their GBTC shares, exerting downward pressure on GBTC prices and on bitcoin markets more generally," JPMorgan said.<h3>William Quigley, Tether co-founder </h3>The co-founder of one the world's largest stablecoins told Insider there may not be an immediate sell-off on the expiration dates because some of the institutions that bought into GBTC six months ago are now "underwater.""Some of them will certainly hold off selling immediately to avoid realizing a loss," he said. Quigley also noted that the Grayscale's declining discount to net asset value (NAV) may indicate there's less institutional demand for the once highly-sought after product. He doesn't see this as an indication of waning institutional interest in bitcoin, but instead a sign institutions are acquiring bitcoin in other ways, like through Canadian ETFs. <h3>Ryan Todd, The Block Crypto</h3>Ryan Todd, a research analyst at The Block Crypto told Insider that the market may simply be on high alert for negative catalysts in the cryptocurrency market."I think the lockup is more of something to point to in the market doldrums of summer and post a 50%+ correction from bitcoin's market top," he said.He added that with the declining discount to NAV, many investors may not sell their GTBC shares when the lockup expires. Investors may potentially need to buy more bitcoin, in fact."There's even an argument to be made that some investors that targeted market-neutral trading strategies to harvest the GBTC premium by borrowing bitcoin and sending it to the trust 6 months ago will now have to buy back physical bitcoin in order to pay back the borrowed bitcoin," said Todd.

4 crypto experts break down how one of the largest Grayscale Bitcoin unlock periods will affect the cryptocurrency market

<ul><li>Institutions are not buying the dip in <keyword id="6354947" type="UNKNOWN" weightage="60" keywordseo="bitcoin">bitcoin</keyword>, according to a Wednesday note from JPMorgan. </li><li>The bank said the fair value of bitcoin over the medium-term could range from $23,000-$35,000.</li><li>Headwinds still exist for bitcoin, including the end of a six-month lock up period for nearly $4 billion worth of the Grayscale Bitcoin Trust.</li><li><a href="https://newsletter.businessinsider.com/join/4np/10-things-opening-bell?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingest?utm_source=markets&amp;utm_medium=ingestce=markets&amp;utm_medium=ingest" target="_blank" rel="noopener">Sign up here for our daily newsletter, 10 Things Before the Opening Bell</a>.</li></ul>The recent decline in <a href="https://markets.businessinsider.com/currencies/btc-usd">bitcoin</a> may take time to recover as institutions fail to step in and buy the dip, according to a Wednesday note from JPMorgan.The bank sees the fair value of bitcoin over the medium-term at $23,000-$35,000, based on the current volatility ratio of bitcoin to gold. Previously, <a href="https://markets.businessinsider.com/currencies/news/bitcoin-price-outlook-rally-100000-move-would-be-unsustainable-jpmorgan-2021-1-1029931561">JPMorgan outlined how bitcoin could hit $140,000</a> if it matches the allocation and volatility profile of gold.But on Wednesday, the bank said, "full convergence or equalization of volatilities or allocations [between gold and bitcoin] is unlikely in the foreseeable future."Bitcoin has seen <a href="https://markets.businessinsider.com/currencies/news/bitcoin-price-30000-support-technical-analysis-make-or-break-forecast-2021-6-1030543377">its value plummet about 50% since its peak</a> in mid-April, and many have attributed part of that decline to <a href="https://markets.businessinsider.com/currencies/news/bitcoin-price-btc-china-mining-crackdown-sichuan-cryptocurrencies-ether-2021-6-1030538480">China's crackdown on cryptocurrency mining.</a> But JPMorgan views the recent developments out of China as a positive for bitcoin in the long-term."The crackdown on mining operations in China should be considered as positive for bitcoin over the medium-term as it accelerates a shift away from China's high share in bitcoin's hash rate, reducing concentration," JPMorgan said.The bank views bitcoin's recent decline more of a continuation of weak flows and price dynamics, rather than pinning it on China's mining crackdown. And the weak flows suggest institutions are not stepping in to buy the dip in bitcoin at current levels."More than a month after the May 19 crypto crash, bitcoin funds continue to bleed, even as inflows into physical gold ETFs stopped. This suggests that institutional investors, who tend to invest via regulated vehicles such as publicly listed bitcoin funds or CME bitcoin futures, still exhibit little appetite to buy the bitcoin dip," the note said.Finally, JPMorgan sees one big headwind remaining for bitcoin: the expected selling of the Grayscale Bitcoin Trust following the end of a six-month lock-up period. The bank noted that nearly $4 billion flowed into the trust fund in December and January and is subject to the six-month lock-up period. That period ends in June and July, and investors will likely sell at least some of the trust fund given the recent volatility. "Despite this week's correction we are reluctant to abandon our negative outlook for bitcoin and crypto <keyword id="31671" type="CITY" weightage="100" keywordseo="markets">markets</keyword> more generally. Despite some improvement, our signals remain overall bearish," JPMorgan concluded.

Institutions are not buying the dip in bitcoin, and it's fair value could be as low as $23,000, JPMorgan says

<ul><li>Approval of a <a href="https://markets.businessinsider.com/currencies/btc-usd">bitcoin</a> exchange-traded fund in the US could pull investors out of a popular trade and erode a key support of the <keyword id="6357017" type="DEFINITION" weightage="60" keywordseo="cryptocurrency">cryptocurrency</keyword>'s lofty price, <a href="https://markets.businessinsider.com/stocks/jpm-stock">JPMorgan</a> strategists said Friday.</li><li>Institutional investors largely invest in the Grayscale <keyword id="6354947" type="UNKNOWN" weightage="60" keywordseo="bitcoin">Bitcoin</keyword> Trust for regulatory reasons instead of directly buying bitcoin. But the trust touts a premium to the underlying token.</li><li>The Securities and Exchange Commission is expected to authorize a <keyword id="2474430" type="PERSON" weightage="60" keywordseo="Bitcoin-ETF">bitcoin ETF</keyword> in 2021. The introduction of such a fund could drive institutional investors out of Grayscale's trust and cut into the premium.</li><li>While outflows from Grayscale's trust could present a near-term pressure for bitcoin prices, JPMorgan still expects bitcoin ETFs to benefit the cryptocurrency in the longer term.</li><li><a href="https://newsletter.businessinsider.com/join/4np/10-things-opening-bell" target="_blank" rel="noopener">Sign up here our daily newsletter, 10 Things Before the Opening Bell</a>.</li></ul>The introduction of a <a href="https://markets.businessinsider.com/currencies/btc-usd">bitcoin</a> exchange-traded fund in the US is likely to pull investors out of a popular buying option and create a near-term drag on the token's price, <a href="https://markets.businessinsider.com/stocks/jpm-stock">JPMorgan</a> said Friday.The Securities and Exchange Commission is expected to approve such an ETF this year as the Biden administration brings new leadership to the agency. Regulatory authorization would strengthen bitcoin's investment case in the long term. But more immediately, approval would likely sap investor capital from the Grayscale Bitcoin Trust, according to JPMorgan.While retail investors typically buy bitcoin directly, institutional investors largely purchase stakes in Grayscale's trust for regulatory reasons, according to the strategists. The fund effectively holds a monopoly on institutional capital flowing into bitcoin and therefore boasts a large premium to the cryptocurrency it tracks.A bitcoin ETF would offer an alternative to the Grayscale trust and cut into the premiums that funds pay, the team said.Read more: <a href="https://www.businessinsider.com/bitcoin-investing-how-to-value-crypto-why-buy-matt-hougan-2021-1" target="_blank" rel="noopener">The CIO of a $500 million crypto asset manager breaks down 5 ways of valuing bitcoin and deciding whether to own it after the digital asset breached $40,000 for the first time</a>"A cascade of GBTC outflows and a collapse of its premium would likely have negative near-term implications for bitcoin given the flow and signaling important of GBTC," the bank said in a note to clients.Bitcoin cooled to start the week after soaring to nearly $42,000 on Friday. The cryptocurrency <a href="https://markets.businessinsider.com/currencies/news/bitcoin-price-dollar-rally-politics-risk-trump-impeachment-ethereum-crypto-2021-1-1029946824">tumbled as much as 19%</a>, to $30,775.26, on Monday as investors secured profits from its weeks-long rally. Bitcoin still sits roughly 90% higher over the past month.JPMorgan didn't estimate just how much an ETF could slam bitcoin, but the purchase structures used by institutional investors provide some hints. A typical trade for monetizing the Grayscale trust's premium involves borrowing bitcoin, placing the tokens in the trust, and receiving shares with a six-month lockup period. Investors then hedge the stake by shorting GBTC shares.Read more: <a href="https://www.businessinsider.com/stock-picks-to-buy-high-dividend-investing-strategy-from-bofa-2021-1">BANK OF AMERICA: Buy these 10 Dow stocks to take advantage of rich dividends and a long-term strategy primed for a comeback in 2021</a>Some institutional investors likely entered the monetization trade during the second half of 2020 with the intention of selling after the lockup period, JPMorgan said. The strategists estimated that roughly 15% of GBTC shares were being used for the monetization trade. Once the six-month lockup expires, a significant portion of the trust's investors could rush for the exits to pocket the premium.A bitcoin ETF would only intensify the exodus, the bank added. Such a fund would erode Grayscale's monopoly status and could prompt more investors to leave the trust.Bitcoin traded at $33,625.67 as of 8:48 a.m. ET on Monday.Now read more <keyword id="31671" type="CITY" weightage="100" keywordseo="markets">markets</keyword> coverage from Markets Insider and Business Insider:<a href="https://www.businessinsider.com/stock-market-crash-3-pieces-investing-advice-stock-market-bubble-2021-1" target="_blank" rel="noopener">'This one feels a lot like 1999': An ex-Wall Street strategist breaks down why he is approaching the markets with a 'tactically bullish' strategy - and 3 pieces of advice on how to play a market set for a correction</a><a href="https://markets.businessinsider.com/currencies/news/bitcoin-price-btc-performance-explanation-cryptocurrency-market-crash-token-investing-2021-1-1029945005">3 reasons why bitcoin has doubled in less than a month - and why experts think it won't repeat its 2017 crash</a><a href="https://www.businessinsider.com/december-jobs-report-140000-payrolls-lost-unemployment-rate-coronavirus-recession-2021-1">US payrolls post surprise drop of 140,000 in December, the first decline since April as America's labor-market struggles continue</a><a href="https://markets.businessinsider.com/currencies/btc-usd"><div type="image" title="BTC" height="1056" width="1410" msid="80217638" hostid="261"></div></a>

Here's why the approval of a US bitcoin ETF would send the cryptocurrency tumbling in the near term, according to JPMorgan

You Searched For "grayscale bitcoin lockup" and got 3 results

4 crypto experts break down how one of the largest Grayscale Bitcoin unlock periods will affect the cryptocurrency market

Emily Graffeo

Institutions are not buying the dip in bitcoin, and it's fair value could be as low as $23,000, JPMorgan says

Matthew Fox

Here's why the approval of a US bitcoin ETF would send the cryptocurrency tumbling in the near term, according to JPMorgan

Ben Winck

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