JP Morgan Casts Doubt on Impact of Spot BTC ETF Approval8. Juli 2023
• JP Morgan has cast doubts on the potential effects of a spot Bitcoin ETF if approved by the SEC.
• The financial giant claims that other Bitcoin products such as future-backed markets have failed to attract investor interest.
• There is growing optimism regarding an application for a spot BTC ETF by BlackRock and other firms.
JP Morgan Casts Doubts On Spot BTC ETF
JP Morgan has cast doubt on the possible effects of a spot Bitcoin (BTC) exchange-traded fund (ETF) if it were approved by the United States Securities and Exchange Commission (SEC). In a new report, analysts at the financial giant opined that while progress has been made in this direction, it may not necessarily be beneficial for the asset’s price and adoption.
Lack Of Investor Interest In Other Bitcoin Products
The report cited lack of investor interest in existing Bitcoin products such as future-backed markets as one of its reasons for its predictions. According to JP Morgan, even though spot bitcoin ETFs have existed in Canada and Europe, they have failed to attract large investor activity despite bear markets.
Spot BTC ETF Advantages
JP Morgan noted that spot BTC ETFs would be better than future-based ones for the market, however, the difference could be minimal and less overblown than some observers have noted. The approval of a spot ETF could see traders and investors shift liquidity from the futures markets leading to a direct replacement without needed growth due to real-time advantages being impacted by current demand and supply. Transparency in the spot market could also increase with an approval of a spot BTC ETF.
Progress Made By Firms With Applications
The new wave of a Bitcoin spot ETF was sparked by BlackRock’s application in June 2023 which many considered to be promising given its previous successes with SEC applications. Following BlackRock, several firms including WisdomTree, Invesco, Valkyrie filed applications with improvements added compared to earlier attempts which had all been declined in 2021.
JP Morgan believes that while progress has been made towards an approval of a spot BTC ETF by SEC, it may not necessarily result in significant changes when it comes to price and adoption of the asset unlike what some observers believe. This is attributed mainly due to lack of activity involving other existing Bitcoin products despite bear markets which means there may not be enough liquidity shifting from futures markets when compared to expectations from an approval decision on a spot BTC ETF application.