An exchange-traded fund (ETF) represents an important investment opportunity. This is a fund that is traded on a stock exchange. In that sense, some analysts have been given the task of studying the consequences of the approval of a Bitcoin ETF approved by the United States Securities and Exchange Commission (SEC).
An ETF works like mutual funds that allow everyone to access an index or commodity that provides investors with the same benefits as the major markets.
Therefore, ETF securities are one of the most popular among users of the stock markets. This is due to the ease of investing in sectors without the fund manager having to charge you. Before buying an ETF, you need to check what is included in the fund.
Specifically, JP Morgan recently released a report looking at the impact of an SEC-approved Bitcoin ETF on the BTC market. Optimism around the possibility of the SEC approving a Bitcoin ETF in the United States this year has risen in anticipation of the SEC’s leadership changes. However, some feel that this could be a negative.
Why could the SEC approve a Bitcoin ETF in the United States be negative?
Analysts, including strategist Nikolaos Panigirtzoglou, went on to explain why they forecast a negative outlook. “The reason is a possible decrease in the Grayscale Bitcoin Trust (GBTC) premium to NAV (net asset value) generated from the creation of a Bitcoin United States ETF.”
They explained that some institutional investors probably subscribed to GBTC during the second half of last year. All likely with the intention of selling after the 6 million unlock period.
The expert is of the opinion that as the 6 million unlock period expires, some of these institutional investors could sell GBTC during the first half of 2021. One possible explanation is that they would seek to monetize the premium. If it materializes, this selling pressure will put downward pressure on GBTC’s premiums.
What conclusions did JP Morgan reach in this regard?
As can be seen, the Bitcoin ETF would provide an alternative investment vehicle to the GBTC for institutional investors. Along those lines, JP Morgan analysts concluded that a cascade of GBTC exits and a collapse of its premium would likely have negative short-term BTC implications. This is thanks to the flow and importance of GBTC.
The story is a bit different in the long run, as indeed a US Bitcoin ETF would be positive for your valuation. Also, on Twitter.
On the other hand, Vaneck’s director of digital asset strategy, Gabor Gurbacs, tweeted that “institutions want a Bitcoin ETF.” The proof of his belief is that his company recently filed a proposal with the SEC for a Bitcoin ETF. Therefore, it could be said that you do not agree with the assertions of JP Morgan.