JPMorgan Throws Cold Water On Bitcoin Bull Thesis

Amidst growing anticipation surrounding the potential approval of spot bitcoin exchange-traded funds (ETFs), digital assets have experienced a notable upswing in the past month. However, according to a research report by JPMorgan, the bank suggests that this surge may be excessive.

The bullish sentiment driving this enthusiasm is attributed to two key arguments, as outlined by analysts led by Nikolaos Panigirtzoglou. The first centers on the belief that the approval of a spot bitcoin ETF would attract new capital to the crypto markets. The second argument posits that such approval would mark a victory for the crypto industry and a setback for the Securities and Exchange Commission (SEC), potentially softening the regulatory stance of the SEC towards the crypto sector.

JPMorgan expresses skepticism toward both assertions. Instead of attracting new capital, the bank suggests that existing funds may shift from current bitcoin products, such as the Grayscale Bitcoin Trust, bitcoin futures ETFs, and listed mining companies, toward the newly approved spot ETFs. The bank cites existing instances of such ETFs in Canada and Europe, which, despite their presence, have witnessed limited interest from investors.

Despite recent legal setbacks for the SEC in court rulings related to Ripple and Grayscale, the report emphasizes that regulatory tightening within the crypto industry may not necessarily diminish significantly. The unregulated nature of the crypto sector is highlighted as a factor contributing to the uncertainty surrounding regulatory developments.

The report also underscores that pending U.S. crypto industry regulations may not see a drastic shift, particularly in light of recent legal cases. The analysts point out that the memory of the FTX fraud incident remains fresh, suggesting that U.S. lawmakers are unlikely to alter their stance hastily.

Additionally, the upcoming bitcoin halving, expected in April or May of the following year, is identified as a potential bullish factor for crypto markets. However, JPMorgan dismisses this argument as “unconvincing,” asserting that the impact of the halving is unpredictable and has already been factored into current market prices.

Information for this briefing was found via Coindesk and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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