According to JPMorgan, Rejecting Spot Bitcoin ETFs Could Create Trouble for the SEC!

• If the US Securities and Exchange Commission (SEC) does not approve spot bitcoin exchange traded fund (ETF) applications, there is a possibility of legal action being filed by the applicants.
• Last month, the SEC was defeated in a lawsuit filed by Grayscale Investments and did not appeal after the court ruled in favor of the crypto asset manager.
• According to JPMorgan analysts, Bitcoin’s strong performance is supported by “institutional demand” and differs from the retail-driven performance seen in previous periods.

JPMorgan analysts share their views on spot Bitcoin ETFs in their latest report and say that the SEC does not want to deal with a problem again.

JPMorgan Shares Views on Bitcoin ETFs

According to JPMorgan, there is a possibility that if the U.S. Securities and Exchange Commission (SEC) does not approve spot Bitcoin exchange-traded fund (ETF) applications, the applicants may legally file lawsuits. “Any rejection can lead to lawsuits against the SEC and create further legal issues for the institution,” said JPMorgan analysts in a report released on Wednesday, led by JPMorgan’s head analyst Nikolaos Panigirtzoglou.

Although the probability of such a rejection is low, Panigirtzoglou, who mentioned that it is “possible,” told COINOTAG, “We do not think that a new legal battle over spot Bitcoin ETF approval will make the SEC willing to confront again.”

Last month, the SEC lost a case filed by Grayscale Investments and did not appeal after the court ruled in favor of the crypto asset manager. The decision that forced the SEC to reconsider Grayscale’s application to convert its Bitcoin Trust into a spot Bitcoin ETF was formalized earlier this week.

JPMorgan stated last week that it expected the approval of several spot Bitcoin ETFs to come “within months.” Today, it seems that asset managers are making revised applications to clarify issues related to technical preparations and market manipulation, as well as the mingling of client funds with the SEC.

The recent Bitcoin rally is ‘supported by institutional demand’

The price of Bitcoin has risen by almost 20% in the past seven days and is supported by growing optimism regarding spot Bitcoin ETF approval and other factors. According to JPMorgan analysts, Bitcoin’s strong performance is supported by “institutional demand” and is different from the retail-focused performance seen in previous periods. The analysts stated:

“For example, our proxy for CME Bitcoin futures positions, mostly used by institutional investors, not only reached its highest level this year last week but also reached levels seen in August 2022 before FTX’s crash. In contrast, the equivalent of CME Ethereum futures positions has remained calm.”

Additionally, there has been a significant increase in Bitcoin flows to larger wallets in recent times, highlighting institutional investor demand, as noted by the analysts.