JP Morgan questions impact of BTC ETF

JP Morgan, a financial giant, believes that if the Securities and Exchange Commission (SEC) approves a spot Bitcoin (BTC) ETF, it will not have a significant impact on the price and adoption of the asset.

In a new report, the bank stated that while the community celebrates the progress made by firms towards this milestone achievement, there may be downsides in other areas.

The bank’s analysts, led by Nikolaos Panigirtzoglou, explained that spot BTC ETFs have been approved in other countries without being a game-changer for the asset, even during bear markets.

“Spot bitcoin ETFs have existed for some time outside the U.S., in Canada and Europe, but have failed to attract large investor interest.”

The report cited the poor performance of other Bitcoin products, particularly future-backed markets, as a significant reason for their predictions.

“Bitcoin funds overall, including futures-based and physically backed funds, have attracted little investor interest since Q2 2021, also failing to benefit from investor outflows from gold ETFs over the past year or so,” the report reads.

According to the analysis, spot BTC ETFs would be better for the market compared to future-based ones, but the difference could be minimal and less exaggerated than some observers have noted.

If a spot BTC ETF is approved, traders and investors could shift liquidity from the futures markets, leading to a direct replacement without the need for growth.

This is due to the real-time advantages as they are impacted by current demand and supply. Many also believe that the approval of spot ETFs would increase transparency in the spot market.

Landmark spot ETF now within sights

The new wave of a Bitcoin spot ETF was sparked by BlackRock’s application in June 2023. Many consider it to be the real deal following its previous successes with the SEC.

The Commission had notably turned down all previous applications for a spot BTC ETF in the US despite numerous applications by leading firms.

According to the report, there is growing optimism over the prospects of an application being approved by the Commission.

Several applications were filed by firms following BlackRock’s application, including WisdomTree, Invesco, Valkyrie, etc., with several improvements added.

JP Morgan noted that the re-filing of the application by BlackRock and other firms puts them at an advantage as they have now satisfied all known requirements and await future approval.

The buzz around the spot ETF has caused the price of BTC to skyrocket above $31,000, with optimists predicting an even higher price in the coming weeks.

At press time, BTC is trading at $30,404.

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