Monday, May 20, 2024

“Spot Bitcoin ETF Approval Unlikely to Have Significant Impact on Crypto Markets, JPMorgan Analysts Say”

JPMorgan analysts have released a report stating that the approval of a spot Bitcoin exchange-traded fund (ETF) by the U.S. Securities and Exchange Commission (SEC) is unlikely to bring about significant changes in the crypto markets. They highlight the existence of similar spot Bitcoin ETFs in international markets that have failed to gain substantial popularity among investors.

Doubts Regarding the Impact of Spot Bitcoin ETF Approval

Recently, there has been extensive discussion among Bitcoin supporters regarding the potential approval of a spot Bitcoin ETF by the SEC. In mid-June, Blackrock, the largest asset manager in the world, filed for such an ETF, prompting other institutions to submit applications for similar exchange-traded products.

Observers believe that the launch of EDX, a cryptocurrency exchange backed by Charles Schwab, Citadel Securities, and Fidelity Digital Assets, along with the ETF filings, has contributed to an increase in Bitcoin prices. However, JPMorgan analysts express skepticism about the transformative effect of a spot Bitcoin ETF on the crypto markets, even if it receives approval from the SEC.

According to the analysts, “The potential approval of physically backed Bitcoin ETFs by the SEC is unlikely to be a game changer for crypto markets. Spot Bitcoin ETFs have already existed outside the U.S., in Canada and Europe, but have not attracted significant investor interest.” They point out that Canada’s Purpose Bitcoin ETF (BTCC CN) has been available for two years without garnering much attention.

Even ETFs related to Bitcoin derivatives initially experienced some upward movement, but even these products based on futures contracts are not attracting the institutional interest they once did. The JPMorgan analysts explain, “Bitcoin funds in general, including futures-based and physically backed funds, have attracted little investor interest since Q2 2021, and they have also failed to benefit from the outflows from gold ETFs over the past year or so.”

JPMorgan’s statements come following a recent report from The Wall Street Journal, which indicated that insiders with knowledge of the securities regulator deemed the applications from Cboe and Nasdaq, the listing applicants, as “inadequate.” Consequently, several ETF filings were resubmitted after the report, with Coinbase being named as the partner for the surveillance-sharing agreement (SSA). Fidelity, VanEck, Invesco, WisdomTree, and Blackrock resubmitted their filings at the end of June, while Valkyrie refiled on July 3rd.

Feel free to share your thoughts and opinions on the potential impact of a spot Bitcoin ETF receiving approval from the SEC in the comments section below.

Frequently Asked Questions (FAQs) about spot Bitcoin ETF approval

What do JPMorgan analysts suggest about the approval of a spot Bitcoin ETF?

JPMorgan analysts suggest that the approval of a spot Bitcoin ETF by the SEC is “unlikely to be a game changer for crypto markets.” They point out that similar ETFs already exist internationally but have not gained much popularity among investors.

Has a spot Bitcoin ETF been previously launched outside the US?

Yes, spot Bitcoin ETFs have been available outside the US, particularly in Canada and Europe. However, these ETFs have failed to attract significant investor interest, as noted by JPMorgan analysts.

Are spot Bitcoin ETFs generating institutional interest?

According to JPMorgan analysts, even exchange-traded products based on futures contracts, including spot Bitcoin ETFs, are not generating the institutional interest they previously attracted. Bitcoin funds, both futures-based and physically backed, have experienced little investor interest since Q2 2021.

What impact did the launch of EDX and ETF filings have on Bitcoin prices?

The launch of EDX, a cryptocurrency exchange supported by Charles Schwab, Citadel Securities, and Fidelity Digital Assets, along with the filings for ETFs, is believed to have contributed to an increase in Bitcoin prices. However, JPMorgan analysts express doubt about the transformative impact of a spot Bitcoin ETF on the crypto markets, even considering the price surge.

Have there been any recent developments in the ETF application process?

Insiders with knowledge of the securities regulator reportedly deemed the applications from Cboe and Nasdaq as “inadequate.” Subsequently, several ETF filings were resubmitted, with Coinbase named as the partner for the surveillance-sharing agreement. Fidelity, VanEck, Invesco, WisdomTree, and Blackrock are among the institutions that resubmitted their filings, while Valkyrie refiled on July 3rd.

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