JP Morgan published a report on Friday that discusses the impact of an SEC-approved bitcoin ETF on the bitcoin market. “Optimism around the prospect of the SEC approving a bitcoin ETF in the US this year has risen in anticipation of SEC leadership changes,” 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.”
The analysts, including strategist Nikolaos Panigirtzoglou, proceeded to explain why they are forecasting a negative 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 elaborated that “Some institutional investors likely subscribed to GBTC (at NAV) during the second half of last year with the intention of selling after the 6m unlock period … As the 6m unlocked period expires, some of these institutional investors might sell GBTC during the first half of 2021 to monetize the premium. If it materializes, this selling pressure would put downward pressure on GBTC premiums.”
Emphasizing that a bitcoin ETF would provide an alternative investment vehicle to GBTC for institutional investors, the 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.‘’
Nonetheless, JP Morgans analysts admitted in their report that the approval of a bitcoin ETF in the U.S. would be positive for bitcoin over the long term.
Many people on Twitter disagree with the assessment by JP Morgan‘s analysts that an SEC-approved bitcoin ETF would be negative for the industry at all. Vaneck’s director of digital assets strategy, Gabor Gurbacs, tweeted that “Institutions want a bitcoin ETF.” His company recently filed a proposal with the SEC for a bitcoin ETF.
Gurbacs opined: “I believe that a bitcoin ETF may bring many structural benefits to the bitcoin as well as traditional financial markets.” Contrasting JP Morgan analysts view, the Vaneck director wrote, “The approval of a bitcoin ETF would be positive for bitcoin in the near as well as long term.”