Optimism flooded the cryptocurrency market when BlackRock announced that it will place the order for its Bitcoin ETF. But what is expected of this instrument in the long term?
Optimism flooded the market for cryptocurrencies when BlackRock announced that it will submit the request for Bitcoin ETFs. However, one of the largest banks in USA states that this novelty may not generate the expected impact.
“Spot Bitcoin ETFs have existed for some time outside the US, in Canada and Europe, but they have failed to attract the interest of large investors,” they point out from JP Morganwho believe that the appearance of these products in USA “It won’t change the rules of the game.”
According to the New York firm, bitcoin funds in general, including those based on futures and those backed by physical assets, have attracted “little interest from investors since the second quarter of 2021”. Similarly, these experts point out that “they have also not benefited from investor exits from gold ETFs in the last year or so.”
The JP Morgan Forecast
However, JP Morgan does give one thing to these products: They are “more likely” to “reflect the real-time supply and demand” of the queen cryptocurrency compared to futures-based ETFs. “Its approval in the United States would provide more liquidity and improve price transparency in the spot bitcoin markets”they point out.
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In this sense, analysts from the largest bank in the United States point out that, although physically backed bitcoin ETFs offer some advantages over futures-based funds, they are rather marginal. Instead, spot ETFs offer a “more direct and secure” way to get exposure to bitcoin, removing some of the complexities associated with direct custody and transfer of BTC and the basis risk associated with futures-based products.
However, JP Morgan also points out that the introduction of spot bitcoin ETFs could lead to a migration of trading activity and liquidity away from the US bitcoin futures markets. “to the extent that spot bitcoin ETFs replace futures-based bitcoin ETFs.”
Source: Ambito
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