JP Morgan analysts say the US Securities and Exchange Commission, which approves an exchange-traded bitcoin fund (ETF), is likely to rate bitcoin negatively in the short term. The prospect of the SEC approving a Bitcoin ETF under new leadership is optimistic, the analysts say.
The approval of the Bitcoin ETF by the SEC could be negative
JP Morgan released a report on Friday discussing the impact of an SEC-approved bitcoin ETF on the bitcoin market. “Optimism about the prospect of the SEC approving a Bitcoin ETF in the US this year has increased in anticipation of a change in leadership by the SEC,” the analysts wrote, stating:
The approval of a Bitcoin ETF in the US this year is likely to have a negative impact on Bitcoin in the short term.
The analysts, including strategist Nikolaos Panigirtzoglou, further explained why they forecast a negative outlook. “The reason is a possible decline in the Grayscale Bitcoin Trust (GBTC) premium on net asset value [net asset value] through the launch of the Bitcoin ETF in the US, which would handle a large portion of the GBTC investments currently being made to monetize this premium. “
They stated: “Some institutional investors probably subscribed to GBTC (at net asset value) in the second half of last year to sell after the 6 million lock-up period. After the 6 million activation period expires, some of these institutional investors could use GBTC during the first half of 2021 to monetize the premium. Should this happen, this selling pressure would put pressure on GBTC premiums. “
JP Morgan analysts stressed that a Bitcoin ETF would provide institutional investors with an alternative investment vehicle to GBTC and concluded:
A cascade of GBTC outflows and a collapse in premium would likely have a negative impact on Bitcoin in the short term, given the flow and signal importance of GBTC.
Still, JP Morgan analysts admitted in their report that approval of a Bitcoin ETF in the US would be positive for Bitcoin in the long run.
Many people on Twitter disagree with JP Morgan analysts’ assessment that an SEC-approved Bitcoin ETF would be negative for the industry at all. Gabor Gurbacs, Director of Digital Assets Strategy at Vaneck, tweeted: “Institutions want a Bitcoin ETF.” His company recently filed a proposal for a Bitcoin ETF with the SEC.
Gurbacs said, “I believe that a Bitcoin ETF can bring many structural benefits to both Bitcoin and traditional financial markets.” Contrary to the opinion of the analysts at JP Morgan, the Vaneck director wrote: “Approving a Bitcoin ETF would be positive for Bitcoin in both the short and long term.”
Do you think the SEC, which approves a bitcoin ETF this year, is good for bitcoin? Let us know in the comments below.
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