JPMorgan strategists: U.S. approval of a Bitcoin ETF could weigh on the cryptocurrency price in the short term

According to JPMorgan Chase & Co., the U.S. approval of a Bitcoin exchange-traded fund could affect the price of a cryptocurrency in the short term. Because, when there are regulation and protection from the law, the funds will compete directly with the Grayscale Bitcoin Trust – currently the largest cryptocurrency exchange in the world.

JPMorgan strategists: U.S. approval of a Bitcoin ETF could weigh on the cryptocurrency price in the short term

As JPMorgan Chase warns, ETFs will undermine the effective monopoly of the Grayscale trust. The resulting outflow and its price slide relative to its net worth. And this can affect Bitcoin price.

The strategists led by Nikolaos Panigirtzoglou said:

“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.”

Some commentators argue that the Bitcoin ETF approval in the US is more likely with a leadership change at the Securities and Exchange Commission.

In another development, Van Eck Associates Corp. launched a Bitcoin exchange-traded note on the Deutsche Boerse Xetra exchange to capitalize on a wave of interest in digital currencies. The note, which has $2 million in assets, is fully invested in Bitcoin, partially insured, and held offline with a crypto custodian in so-called “cold storage,” providing some protection against theft by hackers.

Gabor Gurbacs, director of digital-asset strategy at VanEck stated:

“The next phase of growth in Bitcoin and digital assets requires well-regulated access vehicles that fit into the established financial markets.”

The ETN bridges the gap between digital assets and mainstream financial markets, he added. While there are other European-listed Bitcoin exchange-traded products, U.S. regulators have blocked recent attempts to list similar vehicles, citing worries such as liquidity, custody, and manipulation in cryptocurrency markets.

Bitcoin has more doubled this year, breaking above $19,000 for the first time since 2017. Increasing purchases by retail investors, institutions, and even billionaires have all been cited as factors for the climb. But the rally has also stirred reminders of the cryptocurrency’s famed volatility, epitomized by the bust that followed the ascent three years ago. Overall, JPMorgan strategists say the introduction of a Bitcoin ETF will be positive for cryptocurrencies in the long term.

You can see the BTC price here.

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