NewsletterJPMorgan Believes spot Bitcoin ETF Won’t Be A Game Changer, Here’s Why
BlackRock’s filing of a spot Bitcoin ETF last month stirred a major storm in the crypto space leading to the BTC price rally to $31,000. Following, a number of big players like Fidelity, WisdomTree, and others also submitted their applications with the US SEC.
While the market is seeing these developments quite optimistically, banking giant JPMorgan believes that it won’t have much impact in the crypto space. In its research report on Thursday, July 6, JPMorgan shared a number of reasons behind its analysis.
Firstly, JPMorgan noted that the SEC is yet to approve an ETF for spot Bitcoin. In the past, the US securities regulator has rejected a number of applications for the spot Bitcoin ETF. However, this time, there’s renewed optimism among investors as they believe that the previous concerns of the SEC have been addressed, notes JPMorgan.
Analysts at JPMorgan led by Nikolaos Panigirtzoglou wrote: “Spot bitcoin ETFs [have] existed for some time outside the U.S., in Canada and Europe, but have failed to attract large investor interest”.
Spot Bitcoin ETF vs Futures Bitcoin ETF
In the report, JPMorgan added that spot Bitcoin ETF will eventually take over the futures Bitcoin ETF. “Spot ETFs are more likely than futures based ETFs to reflect real time supply and demand and their approval in the U.S. would bring more liquidity and enhance price transparency in spot bitcoin markets,” as per the JPMorgan report accessed by CoinDesk.
According to the note, physical backed bitcoin ETFs provide certain advantages over futures-based funds, although these advantages are relatively minor. Spot ETFs offer a simpler and more secure method to invest in bitcoin, eliminating complexities related to custody, BTC transfer, and basis risk associated with futures-based products.
Also, the report notes that funds flow into the Bitcoin funds has been a bit slow. “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 said.
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