JPMorgan Drops Bomb On BTC ETF Approval

It’s been just revealed that the financial giant JPMorgan had something to say about the approval of a BTC ETF. Check out the latest reports about the matter below.

According to a research report by JPMorgan last week, the possibility of approving spot bitcoin exchange-traded-funds (ETF) has generated excitement, leading to a surge in digital assets over the past month. However, the bank believes that the rally may be overdone.

The bullish sentiment has been driven by two primary arguments.

“A spot bitcoin ETF approval would help crypto markets to attract fresh/new capital as the newly-approved ETFs see inflows,” and the “approval would cement a win for the crypto industry and a setback for the Securities and Exchange Commission (SEC) thus making it more likely that going forward the SEC approach towards the crypto industry will soften,” analysts led by Nikolaos Panigirtzoglou wrote.

The bank is doubtful about both arguments. According to them, it is not likely that new capital will enter the crypto sector, but instead, existing capital will likely move from current bitcoin products such as the Grayscale Bitcoin Trust (GBTC), bitcoin futures ETFs, and listed mining companies, into the newly approved spot ETFs.

JPMorgan notes that similar ETFs already exist in Canada and Europe, but have gained little interest from investors since their inception.

Although the rulings against Ripple and Grayscale represent legal defeats for the SEC, the report highlights that the regulatory tightening of the crypto industry may not lessen significantly in the future, considering the unregulated nature of this industry.

“U.S. crypto industry regulations are still pending and we do not believe U.S. lawmakers would shift their stance because of the above two legal cases especially with the memories from the FTX fraud still fresh,” the analysts wrote.

The bank stated that the upcoming bitcoin halving, expected to occur in April or May of next year, is being cited as another positive factor for the crypto markets.

However, the bank finds this argument “unconvincing” as the effect of the halving is unpredictable and has already been factored into the market prices.