JPMorgan: Bitcoin ETF Won’t Bring in New Capital

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  • JPMorgan has cast doubt on the anticipated influx of new capital through a Bitcoin ETF
  • The bank pointed to the limited interest in existing ETFs in Canada and Europe as examples
  • The potential impact of the Bitcoin halving was deemed “unconvincing”

JPMorgan has expressed reservations about the prospect that a Bitcoin ETF will bring masses of new capital into the market. The bank, which has been offering insight on Bitcoin matters for a couple of years now, noted the lack of uptake with existing Bitcoin ETFs in Canada and Europe in its rationale and doubted the long-term impact on regulations of Grayscale and Ripple’s recent victories over the Securities and Exchange Commission (SEC). It also doubted the impact of the Bitcoin halving, calling its potential impact “unconvincing”.

JPMorgan Doubts Public Outlook

JPMorgan explained its Bitcoin ETF thoughts in a research paper published last week and seen by Coindesk. In the paper, the bank opined that the recent surge in digital assets has been driven by the prospect of spot bitcoin ETFs gaining approval. ETFs are investment funds traded on stock exchanges, and the anticipation of a spot bitcoin ETF approval has fueled optimism in the crypto market. However, JPMorgan argues that the market’s bullish sentiment may be overhyped.

Two primary arguments supporting the bullish sentiment include the belief among many that a spot bitcoin ETF approval would attract new capital and that it signifies a win for the crypto industry against the Securities and Exchange Commission (SEC), potentially leading to a softer regulatory approach:

A spot bitcoin ETF approval would help crypto markets to attract fresh/new capital as the newly-approved ETFs see inflows… [the] approval would cement a win for the crypto industry and a setback for the Securities and Exchange Commission thus making it more likely that going forward the SEC approach towards the crypto industry will soften.

The bank, however, maintains a dose of skepticism over these claims, believing that rather than new money coming in, existing funds may simply just shift from current bitcoin products, such as the Grayscale Bitcoin Trust and bitcoin futures ETFs, to the newly approved spot ETFs.

The bank also pointed to similar ETFs in Canada and Europe that have attracted little interest from investors since launching.

Regulations Won’t Soften

As to the argument over softer regulations, JPMorgan claimed that recent legal defeats for the SEC, such as the Ripple and Grayscale cases, may not significantly alter the regulatory landscape:

U.S. crypto industry regulations are still pending and we do not believe U.S. lawmakers would shift their stance because of the above two legal cases especially with the memories from the FTX fraud still fresh.

JPMorgan also doubted the impact of the 2024 halving, calling it an “unconvincing” bullish factor, as its effects are deemed unpredictable and already factored into the market.