Bitcoin News and Finance JPMorgan: Spot Bitcoin ETFs Could Put ‘Severe Downward Pressure on Bitcoin Prices’ Skip to main content

JPMorgan: Spot Bitcoin ETFs Could Put ‘Severe Downward Pressure on Bitcoin Prices’

JPMorgan: Spot Bitcoin ETFs Could Put 'Severe Downward Pressure on Bitcoin Prices'

Global investment bank JPMorgan has cautioned that the approval of spot bitcoin exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC) could “put severe downward pressure on bitcoin prices.” The bank’s analysts estimate that billions of dollars could exit the crypto market after Grayscale Investments converts its bitcoin trust (GBTC) into a spot bitcoin ETF.

Market Impact of Spot Bitcoin ETFs

JPMorgan analyst Nikolaos Panigirtzoglou shared his predictions of the potential impact on the price of bitcoin from the U.S. Securities and Exchange Commission (SEC) approving spot bitcoin exchange-traded funds (ETFs) in a Linkedin post on Friday.

While emphasizing his belief in the imminent approval of spot bitcoin ETFs by the SEC, he cautioned that client discussions are centered on the potential capital outflow from the Grayscale Bitcoin Trust (GBTC) as it transitions into a bitcoin ETF.

“The argument being that a significant amount of GBTC shares has been bought in the secondary market this year at deep discounts to NAV in anticipation of its conversion to ETF and these speculative investors would take profit once GBTC gets converted to an ETF and the discount to NAV gets arbitraged away,” Panigirtzoglou explained. “We estimate that around $2.7bn could come out of GBTC.” The JPMorgan predicted:

In terms of market impact, if this $2.7bn exits completely the bitcoin space then such an outflow would of course put severe downward pressure on bitcoin prices.

“If instead most of this $2.7bn shifts into other bitcoin instruments such as the newly created spot bitcoin ETFs post SEC approval, which is our best guess, then any negative market impact would be more modest. Nevertheless, the balance of risks for bitcoin prices is skewed to the downside in our opinion as some of this $2.7bn is likely to completely exit the bitcoin space,” the analyst continued.

“Significantly more money than the above $2.7bn could exit GBTC if its fee (currently at 200bp) is not lowered sharply post ETF conversion towards our estimated range of the equilibrium fee of around 50-80bp,” he cautioned.

A Shift Towards Regulated Crypto Entities

Panigirtzoglou also shared his analysis of the impact on the crypto industry of the Binance settlement with the U.S. Department of Justice (DOJ), the Treasury, and other federal agencies.

“The Binance settlement is reinforcing an ongoing shift towards regulated crypto entities and instruments which has been the objective of U.S. authorities post FTX collapse,” he said, elaborating:

Such a shift towards regulated crypto entities and instruments should be positive for the crypto ecosystem as more regulation will help attract the interest of traditional market participants and investors.

“Indeed, the participation of big traditional asset managers such as Blackrock and Fidelity in the forthcoming approval of physical or spot bitcoin ETFs by the SEC is consistent with this thesis,” the JPMorgan analyst added.

Do you agree with JPMorgan’s analysis on the price impact of spot bitcoin ETFs? Let us know in the comments section below.

Comments

Popular posts from this blog

Custodial Lightning Network Service Attack Discovered by LN ‘Newbie’ — Hacker Strikes 6 LN Custodians

On September 18, a Redditor posted to the r/bitcoin forum and explained how he discovered a way to “attack [the] lightning Network’s custodial services.” The Reddit account dubbed “Reckless Satoshi” wanted to figure out if a “discrepancy between real routing fees and service’s transaction fee can be exploited for a profit.” The researcher disclosed that he wanted to see how large the damage could be and said “it is bad.” 6 Lightning Network Custodial Services Attacked, Researcher Discloses Findings to Offenders Prior to Public Disclosure A Redditor called Reckless Satoshi published a disclosure post on r/bitcoin this past Saturday and disclosed how he had found a vulnerability with routing fees and some of the Lightning Network’s custodial services. The research attack was done in good faith and after it was complete he disclosed the bugs to the offending services before publishing his findings. Reckless Satoshi used the Lightning Network (LN) attack on six different services incl...

Axie Infinity Down 40% Since Last Week’s Price High, Protocol Revenue Outshines Competitors

Last week, the game token leveraged within the Axie Infinity gaming universe skyrocketed to all-time highs, while other crypto markets remained extremely lackluster. During the last seven days, Axie Infinity’s platform token has dropped significantly in value shedding more than 12%. Meanwhile, the game platform’s smooth love potion token has slid over 8% over the last 24 hours. Axie Infinity Down More Than 40% Since All-Time High Not too long ago, the axie infinity (AXS) token was a topical conversation because it reached an all-time high on July 15. At the time, AXS managed to capture $28.93 per unit and since then it has shed 12.8% during the last seven days. The axie infinity (AXS) token is used within the blockchain-based game that involves battles between token-based creatures called “Axies.” AXS is used for the game’s governance system as well as other actions within the game. At the time of writing axie infinity (AXS) is exchanging hands for $16.70 per coin. AXS/USD on Ju...

Play-to-Earn Game From Polker (PKR) Exchange Listing – Endorsed by Akon

The Play-to-Earn NFT based Polker.Game ‘s native token $PKR has been officially listed on the popular centralized exchange BitMart. Polker.game has been in the spotlight recently as Akon, the American R&B superstar and record producer gave his official endorsement of polker stating that the “game is revolutionary” and that Polker is “hands down.. the best play to earn, NFT game in the space.”. With the BitMart listing and celebrity endorsement from Akon, Polker is perfectly positioned to become a major player in the Play-to-Earn league. Watch Akon’s Video Here What is Play-to-Earn? Although not a new concept, play-to-earn has become a trending term due to the popularity of the NFT game AXIE infinity. In the past, previous play-to-earn games have also achieved success – however, thanks to the huge amount of development in the blockchain space in recent years the gaming experience is now massively improved. Play-to-Earn games are essentially free to play and open to anyone and...

China to Crack Down on Copyright Infringement Through NFTs

Authorities in China are going after creators of digital collectibles based on other people’s works of art, the use of which was not authorized. The government offensive is part of a campaign to combat online copyright infringement and piracy with the participation of several departments. Regulators in China Move to Strengthen Copyright Supervision of Online Platforms The National Copyright Administration of China (NCAC) has recently launched a campaign against copyright infringement and piracy on the internet, together with the Ministry of Industry and Information Technology, the Ministry of Public Security, and the State Internet Information Office of the People’s Republic. A major objective of the initiative is to improve copyright supervision of online businesses by investigating cases involving the sale and distribution of infringing products on short video, live broadcast and e-commerce platforms, and promptly dealing with infringing content, the agency announced in a press r...
Blogarama - Blog Directory