JPMorgan predicts that much of the money currently invested in other cryptocurrencies will be redirected to Bitcoin spot ETFs.
Even before the Bitcoin spot ETF was approved, industry experts had already predicted that demand would be high. This was expected, considering how many years companies in the cryptocurrency space have been pursuing ETFs. But now a report from JPMorgan sheds light on just how popular the new spot Bitcoin ETF has become. According to the report, much of the capital already invested in other Bitcoin products could be moved into ETFs.
Cryptocurrency Capital on the Move
One of the first things the report addressed was the belief that ETFs would bring new capital into the market. Some believed that once ETFs were launched, investments not previously allocated to cryptocurrencies would be invested in them. But JPMorgan’s research team wasn’t entirely convinced.
“We are skeptical of the current optimism of many market participants that the approval of spot Bitcoin ETFs will bring a lot of new capital into the cryptocurrency industry,” the report said.
The cryptocurrency market has been around for years, and it may be the case that institutional investors looking to embrace digital assets have already begun to do so. And while ETFs are still groundbreaking, they may not have the immediate benefits of a new investment that some were hoping for.
However, this does not mean that investments will not be made in those ETFs. Grayscale alone received billions of dollars in investments less than a week after the ETF launched. Interestingly, JPMorgan predicts that much of the money currently invested in other cryptocurrencies will be redirected to Bitcoin spot ETFs.
For example, the report notes that $3 billion could be withdrawn from the Grayscale Bitcoin Trust (GBTC) to be invested in a Bitcoin ETF after taking profits. Part of this, of course, is the appeal of spot ETFs. Many investors have been waiting for the opportunity to invest in spot Bitcoin ETFs, but have opted for other options such as futures ETFs that are already on the market. But now that electrons are available, we can also switch gears. Additionally, there is the issue of high fees charged by Grayscale’s Trust, which puts it at a disadvantage compared to spot ETFs.
If this fee structure does not change, we could see the popularity of other Bitcoin investment vehicles change. Overall, JP Morgan believes a Bitcoin spot ETF could deliver as much as $36 billion in returns, which is no small feat. Most in the cryptocurrency world already predicted that ETFs would be disruptive, and this appears to be happening in several ways.
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