JPMorgan has expressed skepticism regarding the recent robust rally in digital assets, primarily driven by enthusiasm surrounding the potential approval of spot Bitcoin exchange-traded funds (ETFs).
In a research report, the bank noted that the bullish sentiment revolves around the belief that approval of spot bitcoin ETFs would attract new capital and signify a victory for the crypto industry against the Securities and Exchange Commission (SEC). However, JPMorgan argues that it’s more likely existing capital will shift from current bitcoin products to the newly approved spot ETFs, citing limited interest in similar ETFs in Canada and Europe.
The bank also emphasized recent court rulings involving Ripple and Grayscale, stating that while they represent legal defeats for the SEC, regulatory scrutiny in the crypto industry may not significantly ease. Pending U.S. crypto industry regulations and the recent FTX fraud case contribute to the cautious outlook.
Additionally, JPMorgan dismissed the bullish tailwind of the upcoming Bitcoin halving in April next year, deeming the argument “unconvincing” as the effects of the halving are unpredictable and already priced in.
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