When BlackRock applied to create a spot Bitcoin ETF last month, several crypto industry players said the move could push prices to new heights. JPMorgan isn’t buying it.
In a Thursday report, the bank claimed that even if the Securities and Exchange Commission accepts applications by BlackRock, Fidelity, and others for a spot Bitcoin ETF, those investment vehicles are “unlikely to be a game changer for crypto markets.”
The authors noted that the SEC has previously rejected multiple applications for spot Bitcoin ETFs, and even if one or more are approved, that doesn't guarantee interest from investors, who haven't exactly rushed into similar ETFs offered in Canada and in Europe. The biggest spot Bitcoin ETF in the world, Canada’s Purpose Bitcoin ETF (BTCC CN), has seen flat inflows for about two years, according to the report.
“Bitcoin funds overall, including futures based and physically backed funds, have attracted little investor interest since Q2 2021, also failing to benefit from investor outflows from gold ETFs over the past year or so,” the report read.
Any advantages offered by a spot Bitcoin ETF also appear to be marginal, the analysts wrote. Although the investment products could help simplify buying Bitcoin for the average consumer and add liquidity and price transparency to markets, they also could redirect trading activity from existing U.S. Bitcoin futures—or could replace them outright.
Despite the gloomy outlook, JPMorgan has been one of the most active traditional financial firms in the crypto space. The company was one of the first to offer its wealth management clients access to cryptocurrency funds in 2021. And in 2022, the company experimented with using the blockchain for collateral settlements on a private blockchain.
BlackRock and other traditional financial firms continue to push forward with applications despite the possible pitfalls. After the Wall Street Journal reported that the SEC called several of the spot Bitcoin ETF applications “inadequate” last week, many were refiled this week, including those from BlackRock and Fidelity.
In an interview with Fox Business on Wednesday, BlackRock CEO Larry Fink said his firm's ETF was aimed at making crypto investing cheaper and “more democratized.”
On Thursday, Bitcoin reached its highest price in more than a year following the increasing participation of TradFi firms in the sector. The cryptocurrency was trading down less than 1%, near $30,300, as of Friday afternoon.
