JPMorgan Not Sure Bitcoin ETF Can Increase Investor Cryptocurrency Interests

JAKARTA - The latest report released by JPMorgan Chase & Co on Thursday stated that the approval of the Bitcoin Exchange-Trad Fund (ETF) by the United States Securities and Exchange Commission (SEC) will not have a transformative impact on the digital currency ecosystem at large.

Although some of the leading financial companies such as BlackRock Inc, Invesco Ltd, Fidelity Investments, and other asset managers have applied for an ETF Bitcoin spot, the JPMorgan report suggests that the approval may not automatically increase investor interest or change market dynamics as many expect. The study highlights the lack of significant interest from investors in the Bitcoin ETFs that are already available in Canada and Europe.

In addition, the report notes that investor interest in Bitcoin funds in general, both futures and those physically supported, has decreased since the second quarter of 2021.

Furthermore, this report shows that Bitcoin funds have not succeeded in withdrawing investments from gold ETFs over the past year. This suggests that there may be special factors or preferences that affect investor decisions.

The report acknowledges that physically supported Bitcoin ETFs have certain advantages compared to futures-based products, although the profits are relatively small.

The spot ETF provides a more direct and secure method of obtaining exposure to Bitcoin, by eliminating some of the complexities related to Bitcoin storage and transfer. On the other hand, futures-based products involve basic risks and may not offer the same degree of ownership directly.

One of the main advantages mentioned is the ETF spot reflects the real-time supply and demand dynamics. This means that the price of the ETF will reflect the actual change in Bitcoin price. This feature increases price transparency in the spot market of Bitcoin and can increase liquidity.

The approval of spot ETFs in the US is also expected to provide overall benefits to the crypto market. This will increase price transparency as investors will have access to price information in real-time via the ETF. This increased transparency can also help in more efficient pricing discovery in the Bitcoin spot market.

However, this report notes that the introduction of the Bitcoin spot ETF has the potential to divert trading activity and liquidity from the existing US Bitcoin futures market if the ETF spot is a futures-based alternative replacement.

Even so, coexistence between spot ETFs and futures-based products is still possible, as both can serve different and attractive goals for different types of investors.