JP Morgan Cast Doubts On The Possible Effects of A Spot BTC ETF

Financial giant, JP Morgan believes that an approval of a spot Bitcoin (BTC) ETF by the Securities and Exchange Commission (SEC) will not significantly affect the price and adoption of the asset.

In a new report, the bank opined that while the community lauds the remarkable progress made by firms on the cusp of a milestone achievement, it may have its downsides in other areas. 

The institution’s analysts led by Nikolaos Panigirtzoglou explained that spot BTC ETFs have been approved in other jurisdictions without being the game-changer for the asset even during bear markets. 

“Spot bitcoin ETFs [have] existed for some time outside the U.S., in Canada and Europe, but have failed to attract large investor interest.”

The report cited the poor performance of other Bitcoin products, particularly future-backed markets, as a significant reason for its predictions. 

“Bitcoin funds overall, including futures-based and physically backed funds, have attracted little investor interest since Q2 2021, also failing to benefit from investor outflows from gold ETFs over the past year or so,” the report reads. 

According to the analysis, spot BTC ETFs would be better than future-based ones for the market, however, the difference could be minimal and less overblown than some observers have noted. 

The approval of a spot BTC ETF could see traders and investors shift liquidity from the futures markets leading to a direct replacement without needed growth. 

This is due to the real-time advantages as they are impacted by the current demand and supply. Many also believe that the approval of spot ETFs would increase transparency in the spot market.

Landmark spot  ETF now within sights

The new wave of a Bitcoin spot ETF was sparked by BlackRock’s application in June 2023. Many consider it to be the real deal following its previous successes with the SEC. 

The Commission had notably turned down all previous applications for a spot BTC ETF in the US despite numerous applications by leading firms. 

Per the report, there is growing optimism over the prospects of an application scaling the Commission’s hammer. 

Several applications were filed by firms following BlackRock including WisdomTree, Invesco, Valkyrie, etc with several improvements added. 

JP Morgan noted that the re-filing of the application by BlackRock and other firms puts them at an advantage as they have now ticked all known boxes and await approval in the future. 

The buzz around the spot ETF skyrocketed the price of BTC above $31,000 with bulls predicting a much higher price in coming weeks. 

At press time, BTC exchanges hands at $30,404.