SEC Approval Of Spot Bitcoin ETFs Won’t Change Crypto Industry, Say JPMorgan Strategists – TradingView News

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BlackRock, the world’s largest wealth manager and currently the de facto leader of the ETF movement, filed with the SEC last month, prompting optimism and higher Bitcoin prices.

While most crypto fans believe that the hoped-for successful approval of a spot bitcoin exchange-traded fund in the US would be a defining moment in crypto history, JPMorgan analysts claim that such a move by the SEC will not have any significant impact on the cryptocurrency would have market for several reasons.

Spot Bitcoin ETFs have “rather marginal” benefits

News of a spate of applications for a spot bitcoin ETF from the likes of BlackRock, Fidelity, Valkyrie, WisdomTree, ARK Invest and others sent the lead cryptocurrency’s price surging to multi-month highs. For most enthusiasts, this was a sign that institutional investment in the cryptoverse is once again on the horizon.

However, JPMorgan analysts led by Nikolaos Panigirtzoglou point out in a Thursday report that spot BTC ETFs in Canada and Europe have been around for a long time without attracting much interest from investors, which is why “the potential approval of physically deposited Bitcoin ETFs by the SEC.” [Securities and Exchange Commission] It is unlikely that this will change the game of crypto markets.”

The analysts also acknowledged that spot BTC ETFs offer certain advantages over futures bitcoin ETFs, but these advantages are “rather marginal.” Physically-backed Bitcoin ETFs would allow a large number of American retail investors to get involved in the game without having to store the cryptocurrency themselves. Unlike the futures-based ETFs, these spot ETFs also have the potential to more accurately match real-time supply and demand, resulting in improved liquidity and greater price transparency, according to JPMorgan analysts.

Still, the launch of spot bitcoin ETFs could shift trading activity away from the bitcoin futures markets in the U.S. “to the extent that spot bitcoin ETFs replace futures-based bitcoin ETFs,” they added.

Will 2023 be the year of the spot bitcoin ETF?

While several well-known funds and companies have filed filings for spot Bitcoin ETFs with the SEC in the past, all have either backed out or been rejected outright by US regulators since 2017. In Canada, however, key funds including Purpose Bitcoin, 3iQ CoinShares, and CI Galaxy Bitcoin — all invested directly in spot BTC — are already available for customers.

JPMorgan strategists believe the SEC could actually approve one of the recent new filings for the long-awaited spot product, as it is expected to allay some of the regulator’s earlier concerns as potential ETF issuers announce their intent have entered into joint surveillance agreements with Coinbase, the largest crypto exchange in the US. Under a surveillance agreement, information about market trading and clearing activities is shared between companies to prevent potential market manipulation.

Last month, the SEC approved the first leveraged bitcoin futures ETF, the Volatility Shares 2x Bitcoin Strategy ETF (BITX). The open question now is whether the commission will also approve the first spot bitcoin ETF in the US this year.