According to JPMorgan Chase & Co. US approval of an exchange-traded fund could weigh the price of the digital currency in the short term.
This is because competition from such a vehicle can cause the flow of the car Grayscale Bitcoin Trust, the world’s largest traded cryptocurrency fund. The ETF will defend the effective monopoly of the Grayscale trust, which flows out and leaves a drop in its premium to net asset value – which in turn could hurt Bitcoin’s price, strategists led by Nikolaos Panigirtzoglou wrote in a note.
“A waterfall of GBTC outflow and a collapse of its premium is likely to have negative consequences for Bitcoin in the short term, given the flow and signal importance of GBTC,” they said Friday.
Some commentators consider the approval of a Bitcoin ETF in the United States to be more likely with changing leadership at the Securities and Exchange Commission. VanEck Associates Corp. recently submitted to the regulator to present one, after relinquishing a previous attempt. The JPMorgan strategists said that the launch of a Bitcoin ETF should be positive for the cryptocurrency in the long run.
Bitcoin fell Monday and slipped up 15% to about $ 32,400. The decline has shaken confidence in the volatile cryptocurrency boom. The digital currency, which as recently as January 8 reached a record high of almost $ 42,000, traded at $ 35,400 in London at 8:26 p.m.
(Updates with the latest Bitcoin move in the last paragraph.)