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Global banking giant JP Morgan included spot Bitcoin exchange-traded funds (ETFs) in its published research report. JP Morgan analysts are uncertain about how much new capital the new spot Bitcoin ETFs will attract, but they expect it to draw a higher amount of funds compared to other crypto-based investment products.
ETFs’ Main Focus: The Size of Capital Flows
The JP Morgan report noted that the market’s response to the U.S. Securities and Exchange Commission‘s (SEC) reluctant approval of spot Bitcoin ETFs has been relatively quiet, and now the focus has shifted to how much capital these new ETFs will attract.
Nikolaos Panigirtzoglou and his team of analysts expressed skepticism about the optimism shared by many market participants that the approval of spot Bitcoin ETFs will lead to a significant influx of new capital into the crypto market.
Nevertheless, the global banking giant anticipates a significant rotation into the newly launched spot ETFs, even if there is no new capital entering the crypto market, expecting up to $36 billion to move into ETFs.
Significant Investor Migration Expected in GBTC
Furthermore, JP Morgan expects investors who profited from buying discounted GBTC shares in the secondary market last year to transition to the new spot Bitcoin ETFs. Analysts also highlighted an expected $20 billion flow from individual investors moving from crypto exchange wallets to the new ETFs.
Moreover, the report added that Grayscale‘s high fund management fee will trigger exits from the ETF, and unless the fee is reduced to the level set by other ETF issuers like BlackRock, a significant amount of capital will shift to ETFs with lower fund management fees. JP Morgan analysts foresee a relatively quick exit from GBTC due to its high fund management fee.
According to the report, institutional investors holding Bitcoin assets in fund format will switch to cheaper spot ETFs from futures-based ETFs and GBTC, especially if GBTC is slow to reduce its fund management fees.
