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Grayscale Victory Paves the Way: JP Morgan Analysts Bullish on SEC Being Forced to Approve Spot Bitcoin ETF Approval

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  • JP Morgan analysts predict that the SEC is likely to approve multiple spot Bitcoin ETFs, citing recent legal developments and the SEC’s position on futures-based Bitcoin ETFs.
  • While this would mark a significant milestone in the U.S., JP Morgan also notes that spot Bitcoin ETFs in other regions like Canada and Europe haven’t yet seen significant investor traction.

SEC’s Cornered Stance: A Springboard for Spot Bitcoin ETFs?

In an unprecedented analysis led by Nikolaos Panigirtzoglou, JP Morgan analysts project that the U.S. Securities and Exchange Commission (SEC) is moving toward an almost inevitable approval of multiple spot Bitcoin Exchange-Traded Funds (ETFs). This forecast is catalyzed by a recent federal court ruling that criticized the SEC’s “arbitrary and capricious” denial of Grayscale’s proposal to convert its BTC Trust into a spot ETF. The court ruled that the SEC failed to provide a rationale for differentiating futures-based from spot-based Bitcoin ETFs, thereby necessitating a reevaluation.

A Chess Game of Regulatory Decisions

Panigirtzoglou’s commentary elaborates that the SEC would be compelled to roll back its prior approvals of futures-based Bitcoin ETFs to justify its negation of Grayscale’s spot ETF bid. Such an about-face would not only be operationally disruptive but would also inflict reputational harm on the SEC. Therefore, it becomes more plausible that the SEC will greenlight pending spot Bitcoin ETF applications from several asset managers, Grayscale included.

Recent SEC decisions to defer action on spot Bitcoin ETF applications from financial powerhouses like BlackRock, Fidelity, and Invesco until mid-October have ignited further market speculation. The JP Morgan team interprets this delay as the SEC’s maneuver to approve multiple applications in one fell swoop, thereby leveling the playing field and stimulating competition, which could consequently lower ETF fees.

Caution on the Horizon: Not a Guaranteed Windfall

While the potential nod for spot Bitcoin ETFs in the U.S. would be landmark, the analysts at JP Morgan also express caution. They point out that similar spot Bitcoin ETFs in Canada and Europe have been operational but have not attracted remarkable investor interest. The team further observes that the decline in gold ETFs over the past year has not significantly diverted capital into Bitcoin-based funds, including futures ETFs.

Additionally, Panigirtzoglou suggests that despite current market volatility, the crypto market appears to be nearing a bottom, projecting a potential upswing in the latter half of the year. This nuanced analysis offers a balanced view, acknowledging both the regulatory winds pushing toward approval and the market dynamics that may not automatically guarantee the success of newly approved spot Bitcoin ETFs.

As of the latest data, BTC is trading at $25,974.

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Ralf Klein is a computer engineer specializing in database technology, and as such, he was immediately fascinated by the possibilities of blockchain when he first heard about it, especially since this distributed, tamper-proof technology can be the foundation for much more than just cryptocurrencies. At ETHNews, he translates the articles of his English-speaking colleagues for the German readers. Business Email: info@ethnews.com Phone: +49 160 92211628