JPMorgan Predicts Bitcoin Prices Potentially Drop If ETF Approved By Regulators

JPMorgan analysts expressed their pessimistic views regarding Bitcoin ETF. (Photo; Doc. Finbold)

JPMorgan, one of the largest investment banks in the world, has given its views on the impact of SEC's bitcoin ETF approval of bitcoin prices. The bank analyst warned that there is potential capital outflow from Grayscale Bitcoin Trust (GBTC), the largest crypto investment product, which can reduce bitcoin prices.

JPMorgan analyst Nikolaos Panigirtzoglou shared its negative views on the impact of the Bitcoin price if approved by the US Securities and Exchange Commission (SEC). In contrast to other optimistic views on the impact of Bitcoin ETF, the JPMorgan analyst warned of a decrease in BTC prices if the SEC approved.

The warning from Nikalos Panigirtzoglou was shared in a post on LinkedIn on Friday, November 24 yesterday. He himself believes that the Bitcoin spot ETF will be approved by the SEC. The warning of the falling BTC price after approval is not without reason. The analyst assessed that the cause of the BTC price decline was Grayscale Bitcoin Trust (GBTC) which will transition to the Bitcoin ETF.

For your information alone, GBTC is the largest crypto investment product with assets under management (AUM) of around $38 billion or equivalent to IDR 590 trillion. GBTC allows investors to gain exposure to bitcoin without having to buy or store it directly. However, GBTC is often traded with discounts or premiums against the underlying net asset value (NAB) of bitcoin, which reflects demand and supply in the secondary market.

"The arrangement is that a large number of GBTC shares have been purchased in the secondary market this year with a large discount on NAB in anticipation of its conversion to ETF and these speculative investors will profit after GBTC is converted into ETF and discounts on NAB will be increased," Panigirtzoglou said. "We estimate that around $2.7 billion (Rp41.9 trillion) can get out of GBTC."

In terms of market impact, if the $2.7 billion is completely out of bitcoin space, then such outflows will of course put severe pressure on the price of bitcoin. He also emphasized that if the amount of funds switched to the Bitcoin Spot ETF, the market would not be so affected.

"If most of these $2.7 billion shifts to other bitcoin instruments like the newly created spot bitcoin ETF after SEC approval, which is our best guess, then the market's negative impact will be smaller. However, the risk balance for bitcoin prices is leaning towards its negative side. in our opinion, because some of the $2.7 billion will most likely completely exit the bitcoin space," said the JPMorgan analyst.