SEC Approving Bitcoin ETF Could Be Negative
JP Morgan issued a study on Friday that explores the effect of the SEC-approved Bitcoin ETF on the Bitcoin market. “Optimism about the prospect that the SEC will approve a bitcoin ETF in the US this year has increased in anticipation of changes in SEC leadership,” the analysts wrote, stating:
“The approval of a bitcoin ETF in the US this year would likely be negative for bitcoin in the near term.”
Analysts, including economist Nikolaos Panigirtzoglou, went on to describe why they were expecting a gloomy outlook. “The reason is a potential decline in the Grayscale Bitcoin Trust (GBTC) premium to NAV [net asset value] from the introduction of bitcoin ETF in the US, which would unwind a big portion of GBTC investments currently placed for monetizing this premium.”
They argued that ‘Any institutional investors are likely to have subscribed to GBTC (NAV) in the second half of last year with the purpose of selling after the 6m unlock period … When the 6m unlocking period ends, some of these institutional investors may have sold GBTC to monetize the premium in the first half of 2021. If it materialises, this sale pressure will put GBTC premiums under downward pressure.”
Emphasizing that a bitcoin ETF would offer an alternate investment vehicle for retail investors to GBTC, JP Morgan analysts concluded:
A cascade of GBTC outflows and a collapse of its premium would likely have negative near-term implications for bitcoin given the flow and signaling importance of GBTC.
However, JP Morgan’s analysts acknowledged in their study that acceptance of a bitcoin ETF in the U.S. would be beneficial for bitcoin over the long term.
Many people on Twitter disagree with JP Morgan’s analysts’ estimation that the SEC-approved bitcoin ETF will be detrimental for the market at all. Vaneck’s director of digital asset management, Gabor Gurbacs, tweeted that “Institutions want a bitcoin ETF.” His company recently submitted a request to the SEC for a bitcoin ETF.
Gurbacs said, “I believe that a bitcoin ETF may bring many structural benefits to bitcoin as well as traditional financial markets.” Contrasting JP Morgan analysts’ opinion, Vaneck’s director said, “The approval of a bitcoin ETF would be positive for bitcoin in both the near and long term.”
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