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JP Morgan Warns of Falling BTC Price With Bitcoin ETF Approval in US

JP Morgan Warns of Falling BTC Price With Bitcoin ETF Approval in US

JP Morgan’s analysts say that the U.S. Securities and Exchange Commission (SEC) approving a bitcoin exchange-traded fund (ETF) is probably going destructive for bitcoin within the close to time period. There is optimism across the prospect of the SEC approving a bitcoin ETF below new management, the analysts say.

SEC Approving Bitcoin ETF Could Be Negative

JP Morgan revealed a report on Friday that discusses the impression of an SEC-approved bitcoin ETF on the bitcoin market. “Optimism across the prospect of the SEC approving a bitcoin ETF within the US this yr has risen in anticipation of SEC management adjustments,” the analysts wrote, stating:

The approval of a bitcoin ETF within the US this yr would probably be destructive for bitcoin within the close to time period.

The analysts, together with strategist Nikolaos Panigirtzoglou, proceeded to elucidate why they’re forecasting a destructive outlook. “The purpose is a possible decline within the Grayscale Bitcoin Trust (GBTC) premium to NAV [net asset value] from the introduction of bitcoin ETF within the US, which might unwind an enormous portion of GBTC investments presently positioned for monetizing this premium.”

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They elaborated that “Some institutional buyers probably subscribed to GBTC (at NAV) through the second half of final yr with the intention of promoting after the 6m unlock interval … As the 6m unlocked interval expires, a few of these institutional buyers would possibly promote GBTC through the first half of 2021 to monetize the premium. If it materializes, this promoting stress would put downward stress on GBTC premiums.”

Emphasizing {that a} bitcoin ETF would supply an alternate funding automobile to GBTC for institutional buyers, the JP Morgan analysts concluded:

A cascade of GBTC outflows and a collapse of its premium would probably have destructive near-term implications for bitcoin given the movement and signaling significance of GBTC.

Nonetheless, JP Morgan’s analysts admitted of their report that the approval of a bitcoin ETF within the U.S. can be constructive for bitcoin over the long run.

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Many individuals on Twitter disagree with the evaluation by JP Morgan’s analysts that an SEC-approved bitcoin ETF can be destructive for the trade in any respect. Vaneck’s director of digital property technique, Gabor Gurbacs, tweeted that “Institutions desire a bitcoin ETF.” His firm lately filed a proposal with the SEC for a bitcoin ETF.

Gurbacs opined: “I consider {that a} bitcoin ETF might convey many structural advantages to the bitcoin in addition to conventional monetary markets.” Contrasting JP Morgan analysts’ view, the Vaneck director wrote, “The approval of a bitcoin ETF can be constructive for bitcoin within the close to in addition to long run.”

Do you suppose the SEC approving a bitcoin ETF this yr is nice for bitcoin? Let us know within the feedback part under.

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