Bitcoin [BTC] has fallen over 15% since last week’s launch of the spot exchange-traded fund (ETF). Grayscale’s GBTC is losing several billions in assets. Investors have moved to ETFs with lower fees, and others have taken profits from the absolute rise in GBTC (and bitcoin) prices. However, some of this money has come from traders who exited what was likely a profitable bet on GBTC’s discount to its net asset value.

The analysts, led by Nikolaos Pantigirtzoglou, wrote: “It appears that GBTC investors have taken full profits after the ETF conversion by leaving the bitcoin space completely rather than switching to cheaper spot Bitcoin ETFs.”

GBTC, which was originally a trust before being upgraded to an ETF, allowed stock traders to get exposure to bitcoin’s price movements without having to buy the cryptocurrency itself. This made it the largest bitcoin fund by AUM in the world. The bank had estimated up to $3 billion in GBTC had been invested on the secondary market in 2023 in order to take advantage of the trust’s discount from NAV. This estimate, combined with the fact that $1.5bn has already been exited from the market, could lead to an additional $1.5bn exiting the space through profit-taking. This will further put pressure on bitcoin in the weeks ahead. The report stated that these outflows also put pressure on GBTC’s fees to be lowered. “GBTC’s fee of 1.5% still appears too high compared with other spot bitcoin ETFs, risking further withdrawals,” it added. As of Friday, GBTC was the most expensive ETF compared to its counterparts. Some charge zero fees in the first six-months or until a specific assets under management target is met.

JPMorgan reports that other spot bitcoin ETFs excluding GBTC attracted $3 billion inflows within only four days. This is comparable to inflows experienced during previous bitcoin products launches. The report said that the majority of these $3 billion inflows are a result of a rotation of existing bitcoin vehicles, such as futures ETFs.