Morgan Stanley analysts stated in their latest report that the Bitcoin spot ETF products from BlackRock and Fidelity outperformed the Grayscale Bitcoin Trust (GBTC), the largest Bitcoin spot ETF in terms of assets under management, in at least two liquidity indicators.
Led by Nikolaos Panigirtzoglou, Morgan Stanley’s analytical team wrote in their report on Wednesday that the first indicator is the Hui-Heubel ratio, which is used by Morgan Stanley to represent market breadth. This indicator shows that the ETFs from BlackRock and Fidelity are about four times lower than GBTC, indicating that these two ETFs significantly outperform GBTC in terms of market breadth. Generally, a lower Hui-Heubel ratio indicates better market liquidity as price fluctuations have a smaller impact on trading volume, while a higher Hui-Heubel ratio suggests poorer market liquidity, with price volatility having a greater impact on trading volume.
The second indicator is based on measuring the average difference between the ETF closing price and its Net Asset Value (NAV). This indicator shows that the price-NAV difference of the recent week for the Bitcoin spot ETFs from Fidelity and BlackRock is close to that of SPDR Gold ETF, indicating a significant improvement in liquidity. At the same time, the value calculated for GBTC ETF remains at a higher level, indicating lower liquidity.
Although these two indicators do not cover all dimensions of market liquidity, especially market depth, there is evidence that the Bitcoin ETFs from BlackRock and Fidelity have advantages over GBTC in certain liquidity indicators related to market breadth. Morgan Stanley analysts also pointed out that if the fees of GBTC are not reduced, the fund may see more outflows of funds, with the capital flowing into other ETFs, especially the Bitcoin ETFs from BlackRock and Fidelity.
