- JP Morgan has published a report suggesting that the approval of a spot Bitcoin ETF by the SEC may not significantly transform the cryptocurrency markets.
- Despite the optimism surrounding the approval of such ETFs, especially BlackRock’s application, JP Morgan supports its claim with various reasons.
- The report also discusses the advantages and disadvantages of spot ETFs versus futures-based ETFs.
JP Morgan’s Stance on Bitcoin ETFs
JP Morgan, a leading global banking institution, has released a report on Bitcoin ETFs. The report suggests that the approval of a spot Bitcoin ETF by the U.S. Securities and Exchange Commission (SEC) may not significantly alter the dynamics of the cryptocurrency markets. This claim is supported by various factors, despite the growing optimism in the market about the potential approval of such ETFs, particularly BlackRock’s application.
Spot ETFs Versus Futures-Based ETFs
The report further delves into the comparison between spot ETFs and futures-based ETFs. It argues that while physically-backed ETFs have certain advantages over futures-based funds, these benefits are relatively marginal. Spot exchange-traded funds (ETFs) are more likely to accurately represent the current supply and demand situation than futures-based ETFs. Therefore, the approval of spot ETFs in the U.S. could potentially increase liquidity in Bitcoin spot markets and improve price transparency.
However, according to the bank, the introduction of spot Bitcoin ETFs could lead to a decrease in trading activities and liquidity in the U.S. Bitcoin futures markets.
High Probability of Approval
On the other hand, brokerage firm Bernstein highlighted the challenging position the SEC faces regarding Bitcoin ETFs in a research report published on Monday. Bernstein suggested that the likelihood of ETF approval is quite high. The SEC has previously granted permission for futures-based ETFs and recently approved leveraged futures ETFs, provided the futures prices are obtained from a regulated exchange like the Chicago Mercantile Exchange (CME).
According to analysts led by Gautam Chhugani, the SEC believes a spot Bitcoin ETF would not be reliable due to factors such as spot exchanges like Coinbase not being subject to their own regulation, unreliable spot prices, and susceptibility to manipulation. The brokerage firm’s report also stated that the absence of a spot Bitcoin ETF has led to the proliferation of more expensive, less liquid, and less efficient over-the-counter products like the Grayscale Bitcoin Trust (GBTC).
