As the market’s enthusiasm swells, fueled by pivotal developments such as the US Securities and Exchange Commission’s (SEC) potential green light of the spot Bitcoin exchange-traded fund (ETF), these financial experts are urging caution, advocating a closer examination of the elements at play.
A Closer Look At ETF Approval And Regulatory Battles
Within the crypto sphere, JPMorgan analysts disclosed that two significant events have captured investor interest and driven prices upward.
First, instead of fresh capital entering the crypto industry to be invested in the newly-approved ETFs, we see as a more likely scenario existing capital shifting from existing bitcoin products such as the Grayscale bitcoin trust, bitcoin futures ETFs and publicly listed bitcoin mining companies, into the newly-approved spot bitcoin ETFs.
This shift, they assert, would not necessarily expand the market’s capital base. JPMorgan’s team points to the tepid response to similar products in Canada and Europe as evidence, suggesting that a US spot Bitcoin ETF might encounter the same lukewarm reception.
Legal victories against the SEC in high-profile cases like Ripple and Grayscale are also interpreted as potential precursors to a regulatory softening. Yet, the analysts remain unconvinced, citing the lingering aftereffects of the FTX scandal and the inherent risks of an under-regulated market. They further disclosed that these factors will likely keep the regulatory tightening trend intact, with little room for significant easing.Bitcoin Halving: A Pre-Priced Crypto Event?
The report delves into the much-discussed Bitcoin halving, which traditionally stokes bullish forecasts. However, JPMorgan’s analysts believe the market has already factored in the halving’s supply-squeeze implications. They noted:This argument seems unconvincing as the Bitcoin halving event and its effect are predictable and in our opinion are well factored into Bitcoin price.They calculate that based on current data, the production cost of Bitcoin post-halving should double, particularly from the current $ $21,000 to $43,000. Their analysis concludes with a sobering outlook, anticipating a potential “buy the rumor, sell the fact” scenario post-ETF approval. Such a dynamic could see prices climb on anticipation and plummet once the event materializes, a pattern familiar to seasoned market observers.
Echoing similar sentiments, financial commentator Peter Schiff has cast doubt on the longevity of Bitcoin’s price surges driven by ETF speculations.
Schiff warns that post-approval, Bitcoin might face a shortage of positive triggers, potentially culminating in a market sell-off as the ‘buy the rumor, sell the news’ phenomenon unfolds.
How many times can rally on the same ETF rumor? Once a U.S. Bitcoin EFT is approved, or is able to convert into an ETF, there will be no more “good” news for Bitcoin to rally on. After years of buying the rumor, everyone will finally be able to sell the news. — Peter Schiff (@PeterSchiff)
Meanwhile, Bitcoin has seen quite a significant move in the past few hours. The asset has now marked a new high for 2023, surging above $37,000, up by nearly 10% in the past day.
