The driving force behind the recent sell-off in bitcoin may have run its course, according to JPMorgan. Bitcoin rallied in the second half of 2023 as optimism around the approval of exchange traded funds grew, but their debut earlier this month has proven to be a “sell the news” event for the world’s largest cryptocurrency. Bitcoin briefly traded above $49,000 shortly before the funds launched, but then fell more than 20% before seeming to stabilize around $40,000. BTC.CM= YTD mountain Bitcoin has retreated since the approval of bitcoin ETFs. JPMorgan strategist Nikolaos Panigirtzoglou said in a note to clients Thursday that the main source of the selling has come from the Grayscale Bitcoin Trust (GBTC) . The fund, which traded at a steep discount as an over-the-counter product before investors became confident that a conversion to an ETF would happen, has seen heavy outflows over the past two weeks. “Profit-taking on previous GBTC investments, made at a discount to [net asset value] last year, has likely been a major driver behind bitcoin’s correction; $4.3bn has thus far exited GBTC since its conversion to ETF,” Panigirtzoglou said. Some outflows from GBTC were expected, given the prior discount and its high cost relative to other bitcoin ETFs. Panigirtzoglou, who had estimated $3 billion of outflows, said that the decline is likely profit taking rather than a sign that the cash is moving to other options, and that the outflows should slow from here. “We conclude that GBTC profit taking has largely happened already. In turn, this would imply that most of the downward pressure on bitcoin from that channel should be largely behind us,” Panigirtzoglou said. Even with the outflows from GBTC, the fund still has about $20 billion in assets under management. And some of the other bitcoin ETFs are seeing big inflows, with funds from iShares ( IBIT ) and Fidelity Wise Origin ( FBTC ) both surpassing $1 billion in inflows. The total inflows and decline in price of bitcoin have missed the optimistic estimates of some crypto bulls, but the dollar amounts are still large compared to other ETF launches.