- JPMorgan has issued a warning that the approval of spot Bitcoin exchange-traded funds (ETFs) by the SEC could “significantly exert downward pressure on Bitcoin prices.”
- JPMorgan analyst Nikolaos Panigirtzoglou shared his predictions about the potential impact of SEC approval of spot Bitcoin ETFs on Bitcoin prices.
- Panigirtzoglou also analyzed the impact of Binance’s agreement with the U.S. Department of Justice (DOJ), the Treasury, and other federal agencies on the crypto industry.
According to the latest assessments by JPMorgan’s analyst, the approval of spot Bitcoin ETFs could create pressure on Bitcoin prices!
JPMorgan Examines the Effects of Spot Bitcoin ETFs
Global investment bank JPMorgan has issued a warning that the approval of spot Bitcoin exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC) could “significantly exert downward pressure on Bitcoin prices.” The bank’s analysts predict that billions of dollars could exit the crypto market after the conversion of Grayscale Investments’ bitcoin trust (GBTC).
JPMorgan analyst Nikolaos Panigirtzoglou shared his predictions about the potential impact of SEC approval of spot Bitcoin ETFs on Bitcoin prices. While emphasizing confidence in the SEC’s approval of spot Bitcoin ETFs in the near future, he noted that customer discussions are focused on the potential capital outflow from Grayscale Bitcoin Trust (GBTC). Panigirtzoglou explained:
“The argument put forward is that this year, much of GBTC’s shares have been bought on the secondary market at deep discounts to Net Asset Value (NAV) by speculative investors expecting the conversion of this share to an ETF, and these speculative investors would sell on the expectation of profit if GBTC is converted to an ETF and NAV is arbitraged at a discount. We estimate that about $2.7 billion could exit GBTC.”
JPMorgan made the following prediction: “From a market impact perspective, if this $2.7 billion exits entirely from the Bitcoin space, this outflow will certainly create significant downward pressure on Bitcoin prices.”
The analyst continued, stating: “If, instead of this $2.7 billion, a significant portion flows into other Bitcoin instruments, namely potential spot Bitcoin ETFs, which is our best estimate, then any negative market impact will be more modest. Nevertheless, the risk balance for Bitcoin prices is tilted to the downside due to the possibility of some of the above $2.7 billion completely exiting the bitcoin space. A significant amount above the $2.7 billion could exit GBTC unless its fee (currently 200 bp) is sharply reduced post-ETF conversion, not pulled down to our estimated equilibrium fee range of around 50-80 bp.”
A Shift Toward Regulated Crypto Institutions
Panigirtzoglou also analyzed the impact of Binance’s agreement with the U.S. Department of Justice (DOJ), the Treasury, and other federal agencies on the crypto industry. Panigirtzoglou stated, “Binance’s agreement reinforces an ongoing shift towards regulated crypto institutions and instruments targeted by U.S. officials following the FTX collapse,” and added:
“A shift towards regulated crypto institutions and instruments should be positive for the crypto ecosystem as more regulation will help attract traditional market participants and investors.”
The JPMorgan analyst concluded, “Indeed, participation by large traditional asset managers like BlackRock and Fidelity in physically or spot-approved bitcoin ETFs, which would be approved by the SEC, supports this thesis.
