JPMorgan Chase Fixes Significant Capital Pouring Into Spot Bitcoin ETFs

A research report prepared by JPMorgan Chase analysts and published late last week contains a statement that there is currently no understanding of how much fresh capital will raise new bitcoin spot exchange-traded funds, which means ETFs.

JPMorgan Chase Fixes Significant Capital Pouring Into Spot Bitcoin ETFs

At the same time, in the specified report, the experts of the mentioned bank announced the expectation of a significant inflow of funds from other crypto products. Analysts note that the market reaction to the reluctant approval by the United States Securities and Exchange Commission (SEC) of spot bitcoin ETFs has been relatively restrained. Currently, according to experts, the focus is on how much capital will be raised by the ETF.

Analysts led by Nikolaos Panigirtzoglou stated in the report their skeptical position regarding the optimistic sentiments that many market participants are currently exposed to, concerning the fact that as a result of the approval of the new spot bitcoin, a lot of fresh capital will appear in the crypto space. However, so far this point of view has not been confirmed by the processes that are being implemented in reality. Representatives of the bank record a significant rotation of existing crypto products in ETFs. Against the background of this trend, it is likely that even in the absence of new capital in the cryptocurrency market, the mentioned spot bitcoin will be able to raise the inflow of funds in the amount of up to $36 billion.

JPMorgan Chase analysts suggest that about $3 billion could exit the Grayscale Bitcoin Trust (GBTC) and migrate to an ETF. This opinion is based on the fact that investors made a profit after buying GBTC shares at a discount on the secondary market in 2023.

Experts of the financial institution also admit the possibility that up to $20 billion from retail investors will migrate from digital wallets held at crypto exchanges to ETFs.

Grayscale’s high fees can cause capital outflows. This scenario is most likely to be realized if the rates are not lowered to the level set by BlackRock (BLK) and other providers. According to JPMorgan Chase analysts, significant capital, possibly an additional $5-10 billion, may exit GBTC in a short time to migrate towards cheaper ETFs.

The report of the financial institution separately notes that institutional investors who hold cryptocurrency in the fund format can shift from futures ETFs and GBTC to cheaper spot ETFs. If GBTC does not make a timely decision to reduce fees, the corresponding process will be fast.

In the last week of the financial assessment, the digital asset market recorded a significant total net capital inflow of $1.2 billion. This figure has not yet been clarified due to the settlement period of T+2. Against this background, Grayscale demonstrated what, in the context of an overall positive trend, can be described as a kind of anomaly. It implies an outflow of capital of $579 million. K33 Research data indicates that the net inflow of funds into the ETF is approximately 17,619 BTC. At the same time, the outflow of funds from GBTC and futures ETFs at a combined 19,000 BTC.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.