fxs_header_sponsor_anchor

The crypto market rally looks overdone, JPMorgan says

Excitement about the potential approval of spot bitcoin exchange-traded-funds (ETF) has fueled a strong rally in digital assets over the past month, but the move higher seems overdone, JPMorgan (JPM) said in a research report last week.

Bullish sentiment has been buoyed by two main arguments, the bank said.

“A spot bitcoin ETF approval would help crypto markets to attract fresh/new capital as the newly-approved ETFs see inflows,” and the “approval would cement a win for the crypto industry and a setback for the Securities and Exchange Commission (SEC) thus making it more likely that going forward the SEC approach towards the crypto industry will soften,” analysts led by Nikolaos Panigirtzoglou wrote.

The bank says it is skeptical of both arguments. Instead of new capital entering the crypto sector, it is more likely that existing capital will move from current bitcoin products such as the Grayscale Bitcoin Trust (GBTC), bitcoin futures ETFs and listed mining companies, into the newly approved spot ETFS.

JPMorgan notes that such ETFs already exist in Canada and Europe and have gained “little interest from investors since their inception.”

While the Ripple and Grayscale court rulings represent legal defeats for the SEC, “it is far from clear that the regulatory tightening of the crypto industry will lessen significantly going forward given how unregulated this industry is,” the report said.

“U.S. crypto industry regulations are still pending and we do not believe U.S. lawmakers would shift their stance because of the above two legal cases especially with the memories from the FTX fraud still fresh,” the analysts wrote.

The bitcoin halving, likely in April or May next year, is also cited as another bullish tailwind for crypto markets, the bank said, but this argument is “unconvincing” as the effect of the halving is unpredictable and is already priced in.

CoinDesk’s parent company, Digital Currency Group, also owns Grayscale.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.


RELATED CONTENT

Loading ...



Copyright © 2024 FOREXSTREET S.L., All rights reserved.