JP Morgan report attempts to undermine Spot Bitcoin ETF

A recent report by JP Morgan looks to play down the effect that the approval of a Spot Bitcoin ETF might bring to the crypto sector.

The hype caused by Blackrock

Once it was announced that the biggest asset manager in the world (Blackrock) had filed for a Spot Bitcoin ETF, the whole crypto market was thrown into a frenzy of hope and optimism that this would be the spark that ignites the next crypto bull run.

There is no bigger player than Blackrock, and add to this the pro-crypto and bitcoin comments made by its CEO Larry Fink on national TV, and you have the perfect narrative to help the crypto market explode higher.

Bitcoin spot ETF is anathema to banks

Such a scenario is absolute anathema to the commercial banking system. Should institutions and the average retail investor get the message that bitcoin is worth investing in, and given the parlous state of the US dollar and all other fiat currencies, a trickle of crypto buying could become an avalanche.

JP Morgan report attempts damage limitation

The line taken by strategists in the JP Morgan report that was released on Thursday is that the Blackrock ETF “is unlikely to be a game changer for crypto markets”. One of the main arguments for this was that Spot Bitcoin ETFs already exist in Canada and Europe, yet have not gained a significant amount of investor interest.

Another avenue of reasoning that was explored by the report was that in the JP Morgan view, a Spot ETF had only “marginal” benefits over a Futures ETF. While some advantages of a Spot ETF were laid out, the only real ‘disadvantage’ appeared to be that a Spot ETF could potentially take trading activity and liquidity away from the already existent Futures ETFs 

Given that a Bitcoin Futures ETF is really more for institutional use than it is for retail investors, this surely can’t be seen as an argument against the Spot ETF. In traditional finance both types of ETF exist and they are used as tools for different types of investor activity.

Opinion

Even as JP Morgan tries to influence markets against any activity that might promote interest or further buying into bitcoin products, they must surely be seeing the writing on the wall. CEO Jamie Dimon is still making his “pet rock” references to bitcoin, but as influential as he might be in financial circles, this kind of ridiculous name-calling is starting to become embarrassing for him.

JP Morgan is after all an institution that is there to make money, and staying out of such a potentially game-changing asset as bitcoin could be financial suicide. 

Granted there is probably a lot of pressure to follow this line by the Biden Administration, perhaps with promises of more tasty regional banks to be thrown at JP Morgan when they fail, to be gobbled up with relish, but how long can it stay out of what can become an alternative asset that can potentially be worth trillions? 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.