According to JPMorgan Chase & Co. The US approval of a Bitcoin exchange-traded fund could weigh on the price of the digital currency in the short term.
That’s because competition from such a vehicle outflows the Grayscale Bitcoin Trust, the world’s largest traded cryptocurrency fund. The ETF would erode the effective monopoly of the Grayscale Trust, trigger an outflow, and lower the premium relative to its intrinsic value – which in turn could hurt Bitcoin’s price, strategists led by Nikolaos Panigirtzoglou wrote in a note.
“A cascade of GBTC outflows and a premium collapse would likely have negative short-term consequences for Bitcoin given the flow and signaling importance of GBTC,” they said Friday.
Some commentators consider the approval of a Bitcoin ETF in the US more likely with changing leadership at the Securities and Exchange Commission. VanEck Associates Corp. recently filed with the regulator to offer one, after withdrawing from a previous attempt. The JPMorgan strategists said the introduction of a Bitcoin ETF should be positive for the cryptocurrency in the longer term.
Bitcoin collapsed on Monday, falling a whopping 15% to around $ 32,400. The drop shook confidence in the volatile cryptocurrency boom. The digital coin, which hit a record high of nearly $ 42,000 on January 8, traded in London at 8:26 a.m. at $ 35,400.
(Updates with the latest Bitcoin move in the last paragraph.)