Bitcoin ETF Could Hurt Price Claims JPMorgan Analysts

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  • JPMorgan strategists have warned that the granting of a Bitcoin ETF could damage the Bitcoin price in the short term
  • The group said that institutional investors would sell their Grayscale holdings en masse in preference for an ETF, causing the price to dip
  • There is just one ETF application remaining from VanEck and the Cboe

A Bitcoin ETF has long been considered to be the catalyst that could shoot the cryptocurrency into the institutional mainstream as well as giving the price a healthy boost, but a group of JPMorgan strategists has cautioned against that thinking. Bloomberg reported yesterday that the group, headed by Nikolaos Panigirtzoglou, warned that a Bitcoin ETF could in fact have “negative near-term implications for Bitcoin” due to an outflow of GBTC from the Grayscale Trust in preference of an ETF.

GBTC “Cascade of Outflow” Anticipated

Panigirtzoglou’s group of strategists, who were behind a recent prophecy that Bitcoin could hit $146,000 long term, stated in their report that a Bitcoin ETF would open up the playing field and greatly reduce Grayscale’s monopoly for institutional Bitcoin purchasing. This would see a huge amount of BTC leaving the fund, which could damage the price:

“A cascade of GBTC outflows and a collapse of its premium would likely have negative near-term implications for Bitcoin given the flow and signaling importance of GBTC.”

Grayscale is the favored investment vehicle for many institutions and currently looks after more than $20 billion in GBTC on their behalf.

VanEck Filed Bitcoin ETF in December

The concept of a Bitcoin ETF was all the rage in 2018/19 in the wake of the 2017 bull market, but with each successive rejection by the Securities and Exchange Commission (SEC), the hype died away. However, VanEck and the Chicago Board Options Exchange re-filed for a Bitcoin ETF at the turn of the year in the hope that the space has matured enough to satisfy the SEC.

The first Bitcoin ETF application was made by the Winklevoss twins in 2013.