SEC Will be Forced to Approve Bitcoin ETF Says JP Morgan

Pathik Bhattacharya
Pathik Bhattacharya Published on September 04, 2023 09:20 AM

JP Morgan analysts led by Nikolaos Panigirtzoglou believe the SEC will be forced to approve spot Bitcoin exchange-traded fund (ETF) applications submitted by various firms, The Block reported, citing a research note.

SEC Will be Forced to Approve Bitcoin ETF Says JP Morgan
Source: Unsplash

Following the SEC's recent legal defeat against Grayscale Investments, JP Morgan analysts led by Nikolaos Panigirtzoglou made a daring prediction. The SEC was ordered by the federal court to reconsider its rejection of Grayscale's petition to convert its Bitcoin Trust (GBTC) into a spot Bitcoin Exchange-Traded Fund (ETF).

The court ruled that the SEC's refusal was "arbitrary and capricious," underscoring the SEC's inconsistent treatment of futures-based Bitcoin ETFs and spot-based Bitcoin ETFs.

Analysts at JP Morgan say that if the SEC's rejection of Grayscale's proposal is sustained, it will necessitate a retroactive withdrawal of the SEC's earlier approvals of futures-based Bitcoin ETFs. They argue that such a move would be enormously disruptive and embarrassing for the SEC. 

Bitcoin ETF Approval Maniac

The SEC's decision to postpone decisions on spot Bitcoin ETFs, including those proposed by industry titans like BlackRock and Fidelity, until mid-October has fueled speculation.

JP Morgan analysts perceive the SEC's delay as a deliberate move, implying that the SEC may choose to accept numerous spot Bitcoin ETF applications at the same time. They say that by using this method, they can eliminate any first-mover advantage and stimulate healthy competition in the ETF industry, potentially leading to cheaper ETF fees.

"It appears more likely that the SEC would be forced to approve the spot Bitcoin ETF applications that are still pending from several asset managers, including Grayscale," Panigirtzoglou said. This prediction means that the SEC may have to reverse its former attitude in order to avoid an awkward situation.

Spot Bitcoin ETFs: The Potential Impact

While the approval of spot Bitcoin ETFs in the United States would mark a significant milestone, JP Morgan analysts have tempered expectations.

They point out that similar ETFs have been operational in regions like Canada and Europe for some time but haven't attracted substantial investor interest. Additionally, they note that outflows from gold ETFs over the past year did not significantly benefit Bitcoin funds, including futures ETFs.

This suggests that even if spot Bitcoin ETFs are approved, their impact on the overall cryptocurrency and financial industries may be limited. It remains to be seen whether US investors will embrace these products with the same enthusiasm as their European and Canadian counterparts.

Bitcoin Price Analysis

As per CoinStats, Bitcoin is currently trading at $25,985.89, up 0.39% in the previous 24 hours, with a live market size of $506 billion. It has a circulating supply volume of 21,000,000 BTC coins and a maximum supply volume of 21,000,000, with a 24-hour trading volume of $9B.

bitcoin price chart

Source: CoinStats

After falling below the important 100-day and 200-day moving averages, Bitcoin's price found support near the significant $25K mark, where a bounce was launched.

This sharp increase was a direct result of developments in the SEC-Grayscale dispute, in which Grayscale obtained a favourable court judgement approving the conversion of GBTC into a Bitcoin ETF.

However, this early rebound was followed by a pullback to retest the 200-day moving average, resulting in another impulsive downward trend that neared the critical support zone at $25K once more.

btc price chart

Source: TradingView


In conclusion, the SEC's courtroom setback in the Grayscale case has sparked speculation about the approval of spot Bitcoin ETFs in the US. JP Morgan analysts predict that the SEC may be forced to approve multiple applications, potentially reshaping the ETF landscape.


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