In a recent research report, JPMorgan Chase warned that the recent surge in Bitcoin and altcoins in anticipation of spot Bitcoin exchange-traded fund (ETF) approval may have been exaggerated. The bank expressed doubts about the prevailing bullish sentiment. He also questioned widespread beliefs about the potential impact of a spot Bitcoin ETF. Here are the details…
JPMorgan spoke for Bitcoin and altcoins
Analysts at JPMorgan outlined two key arguments contributing to the current “hype” excitement in crypto markets. First, the belief that approval of a spot Bitcoin ETF will attract new capital, as newly approved ETFs typically experience inflows. Second, the assumption is that such approval would represent a victory for the crypto industry and potentially soften the Securities and Exchange Commission’s (SEC) stance on cryptocurrencies.
However, JPMorgan disputed both claims. He suggested that instead of new capital inflows into the crypto sector, a more plausible scenario is the movement of existing capital from established Bitcoin products such as Grayscale Bitcoin Trust (GBTC), Bitcoin futures ETFs and listed mining companies to newly approved spot ETFs. The report notes that similar ETFs are already available in Canada and Europe. However, it was emphasized that investor interest has been significantly muted since its inception. Despite recent legal setbacks for the SEC in cases involving Ripple and Grayscale, JPMorgan emphasizes that uncertainty surrounding US crypto industry regulations remains. Thus, he remains cautious about any significant regulatory change in the crypto industry.
What about halving? Will that not affect the price too?
JPMorgan analysts also talked about the Bitcoin halving, which is expected to take place in April or May next year. He noted that this has been cited as a bullish factor for crypto markets. However, the bank said this argument was “unconvincing”. He noted that the effects of halving are unpredictable and are likely already priced into the market. The crypto community is eagerly awaiting developments regarding the potential approval of a spot Bitcoin ETF. Meanwhile, JPMorgan’s report highlights the need to understand the various factors affecting crypto asset markets. Thus, it reminds us that the current rally should be approached with a careful and critical eye.
Meanwhile, Bitcoin started to regain some of the value it lost last week and rose above $37,000 by the end of the week. Saturday and Sunday were expectedly quiet, with little to no real price movement. As of now, BTC is once again hovering around $37,000. However, its market value has fallen below 725 billion dollars. Bitcoin (BTC)’s dominance over altcoins also took a breather. This metric is just over 51% on CMC.
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