JPMorgan predicts little influx of fresh capital with Bitcoin ETF approval

"Analysts Predict ETF Reallocation of Capital as Non-U.S. Bitcoin ETFs Fail to Generate Enthusiasm; Regulatory Reversal in Crypto Industry Unlikely, Despite Ripple XRP/USD and Grayscale's Legal Victories"

Analysts are predicting that new exchange-traded funds (ETFs) in the cryptocurrency market will primarily reallocate existing capital rather than attract fresh funds. They have pointed to the lack of interest in non-U.S. Bitcoin ETFs as a potential indicator of this trend. Despite recent legal victories for Ripple XRP/USD and Grayscale against the U.S. Securities and Exchange Commission (SEC), the analysts are cautious about expecting a substantial regulatory reversal in the crypto industry. This is due to pending U.S. crypto regulations and the lingering memories of the FTX fraud case.

The analysts also highlighted the impact of the forthcoming halving cycle in April on the crypto markets. However, they believe that this event is already priced into the current value of Bitcoin. They noted that there is a historic level of Bitcoin hoarding and future supply pressure, and therefore, any price hikes resulting from the 2024 Bitcoin halving event are already factored into the market.

The market dynamics have taken an interesting turn as the SEC engages in negotiations with Grayscale regarding the conversion of its BTC fund into a spot Bitcoin ETF. This has intensified anticipation around potential policy relaxation. However, JPMorgan analysts predict that these funds will primarily draw from existing bitcoin investments rather than attract new capital. They anticipate a relative value trade in this regard.

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Martin Reid

Martin Reid

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