JP Morgan: Bitcoin ETFs Could See $25 Billion Inflows From Existing Products Without Fresh Capital

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Banking giant JP Morgan projects a huge inflow into spot Bitcoin ETFs from other cryptocurrency-related products even without new capital from the wider financial market.

JP Morgan Market Trends Report Highlights Inflows Following Bitcoin ETF Approval

In a recent report, the bank highlighted market trends following the approval of spot BTC ETFs by the United States Securities and Exchange Commission (SEC). It projected potential high levels of capital inflow for spot Bitcoin ETFs in the coming months.

After the approval, Bitcoins traded sideways for some time before marking a slight correction, leading to diverse predictions from market analysts on the growth of the market and the influence of the spot ETF on other jurisdictions.

The report explained that it would be hard to project the capital inflow the ETF can attract. Still, even without fresh investments from the wider financial market, existing cryptocurrency products will see at least $36 billion moving to spot BTC ETFs for several reasons.

While most analysts projected skyrocketing figures for Bitcoin and the entire digital assets market on the back of a spot BTC ETF approval, the bank expressed a degree of skepticism about the expected inflows.

“We are skeptical of the optimism shared by many market participants at the moment that a lot of fresh capital will enter the crypto space as a result of the spot bitcoin ETF approval.”

Firms back spot Bitcoin ETFs

In recent times, several cryptocurrency firms and bulls have predicted an uphill run as a new investment window opens for Bitcoin, sending the asset price to highs not seen in months.

Matrixport projected a large investment flow to the market and a bullish crypto price above $50,000. At the same time, MicroStategy’s Michael Saylor described it as a new window, adding that it may be the biggest thing on Wall Street in three decades.

Microstrategy Co-founder Michael Saylor says Bitcoin will go on a bull run in 2024, and the approval of a spot-Bitcoin ETF could be the biggest development on Wall Street in 30 years.

Watch our full interview here: https://t.co/0rlQYIYApspic.twitter.com/94dH18gE5Y

— Bloomberg Crypto (@crypto) December 19, 2023

Notably, the price of digital assets, particularly Bitcoin, has been on a steady rise since BlackRock’s ETF application. Gaining over 158% last year in anticipation of approval, the asset’s price pushed miners out of the doldrums ahead of the next halving and rallied bulls.

JP Morgan’s predictions come as other crypto products have recorded massive gains in the last 12 months. This will potentially lead to funds trickling into the ETF. The bank estimates $20 billion inflows from retail investors to ETFs, while $5 billion to $10 billion could leave the Grayscale Bitcoin Trust (GBTC).

US$1.18bn inflow in to Digital Assets last week as US Bitcoin ETFs begin trading — not a record thoughhttps://t.co/fo5ogzEdRk

— James Butterfill (@jbutterfill) January 15, 2024

Nikolaos Panigirtzoglou and other analysts at the firm wrote that Grayscale’s fees could occasion the inflows except the firm reduces its fees to rival BlackRock.

Furthermore, investors may opt to take profits after purchasing discounted GBTC shares. “a lot more capital, perhaps an additional $5 billion-$10 billion could exit GBTC relatively quickly to migrate towards cheaper spot bitcoin ETFs.”

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