JP Morgan analysts have expressed skepticism about the potential for a Bitcoin Exchange-Traded Fund (ETF) approval to revolutionize the cryptocurrency market. They point to the approval of the world’s first Bitcoin ETF in Canada, which failed to attract significant institutional investors. This suggests that the approval of a Bitcoin ETF by the US Securities and Exchange Commission (SEC) would have a similar outcome.
While the SEC is yet to approve a Bitcoin ETF, industry experts believe that this could change with BlackRock’s application. Out of the 576 ETF applications submitted by BlackRock, the SEC has approved 575, indicating that the odds are in their favor. JP Morgan acknowledges the possibility of BlackRock’s approval but dismisses the notion that it would lead to a significant revolution in the crypto market.
The report also highlights the lack of investor interest in Bitcoin funds, including both futures-based and physically backed funds, that have failed to attract attention despite potential outflows from gold ETFs. JP Morgan suggests that the advantages of physically-backed ETFs over futures-based funds are marginal and that spot ETFs offer a more direct and secure way to gain exposure to Bitcoin.
Spot ETFs are also more likely to reflect real-time supply and demand, which would bring more liquidity and enhance price transparency in spot bitcoin markets. This could potentially lead to the replacement of futures-based ETFs. However, some analysts argue that Bitcoin ETFs may have minimal impact since many investors have already gained exposure to the cryptocurrency through other products or by holding the assets directly.
Despite the skepticism expressed by JP Morgan, the approval of the first Bitcoin ETF could still have a significant impact on the cryptocurrency market. It could attract new investors and potentially drive up the price of Bitcoin. However, it remains to be seen whether the SEC will approve such an ETF, and it is unclear how exactly it would affect the overall crypto ecosystem.
while there is optimism surrounding the approval of a Bitcoin ETF, JP Morgan analysts believe that it is unlikely to spark a revolution in the crypto market. The lack of institutional investor interest in existing Bitcoin funds and the marginal advantages of physically-backed ETFs over futures-based funds contribute to this skepticism. Only time will tell the true impact of a Bitcoin ETF approval on the cryptocurrency industry.