According to a research report by JPMorgan, the approval of a spot bitcoin exchange-traded fund (ETF) by the U.S. Securities and Exchange Commission (SEC) is unlikely to have a significant impact on the crypto markets. While the SEC has yet to approve a spot bitcoin ETF, recent filings have addressed previous concerns, leading to increased optimism for approval.
The report highlights that spot bitcoin ETFs have been available in Canada and Europe for some time but have failed to attract substantial investor interest. BlackRock’s unit recently filed paperwork for a spot Bitcoin ETF, prompting other asset managers to follow suit.
Despite the potential advantages of physically backed bitcoin ETFs over futures-based funds, the report suggests that the differences are relatively minor. Spot ETFs offer a more direct and secure method for exposure to Bitcoin, eliminating complexities related to custody, transfer, and basis risk associated with futures-based products.
If approved, spot ETFs are expected to provide real-time supply and demand reflection, enhancing liquidity and price transparency in spot bitcoin markets. However, the report notes that bitcoin funds, including futures-based and physically backed funds, have seen limited investor interest since Q2 2021, failing to benefit from outflows from gold ETFs in the past year.
Anticipation rises about the approval of spot bitcoin ETF
Overall, JPMorgan’s analysis suggests that while the approval of a spot bitcoin ETF by the SEC is anticipated, it is unlikely to be a game changer for the crypto markets due to historical investor behavior and limited interest in bitcoin funds.
JPMorgan suggests that if spot bitcoin ETFs are introduced, there is a possibility of trading activity and liquidity shifting away from U.S. bitcoin futures markets. The bank believes that this potential migration could occur if spot bitcoin ETFs replace futures-based bitcoin ETFs.
