Key Takeaways:
Banking giant JPMorgan experts do NOT think a spot ETF would pump the Bitcoin price.
Meanwhile, the analogy with gold paints a different picture.
Experts are divided on whether the SEC will approve of the first Bitcoin spot ETF in the US.
YEREVAN (CoinChapter.com) – The investment giant BlackRock filing for a Bitcoin Spot ETF caused immense speculation among experts and retail investors. JPMorgan Chase & Co. was among the critics, claiming that even if the Securities and Exchange Commission (SEC) approves the spot ETF, it is “unlikely” to affect the price significantly.
"Spot bitcoin ETFs [have] existed for some time outside the U.S., in Canada and Europe, but have failed to attract large investor interest. […] Bitcoin funds overall, including futures-based and physically backed funds, have attracted little investor interest since Q2 2021." read a recent report by the JPMorgan analytics team, led by Nikolaos Panigirtzoglou.
However, BlackRock CEO Larry Fink recently approved Bitcoin’s “digital gold” narrative. Thus, it pays to look at the history of Gold ETFs and how they affected the yellow metal’s price and adoption.
Gold ETFs allured masses into XAU investment
In detail, gold historically was and still remains a safe haven for investors wishing to hedge against inflation, market instability, and political turbulence. Aside from buying the asset directly, traders and investors can purchase the precious metal on gold ETFs.
The ETF investment system gives traders exposure to a particular asset market without the necessity to purchase, store and resell it. Brien Lundin, the editor of precious metals and mining advisory Gold Newsletter, commented on gold ETFs’ impact on the asset’s popularity.
"Over the long term, the ETFs are putting the world’s gold into the hands of the investing public. They are in effect, democratizing the management, and mismanagement, of the world’s money supplies." asserted the editor.
The global gold ETFs’ holdings have had their ups and downs, but according to June 2023 data, they crossed over 3,420 tonnes, with AUM (assets under management) at $211 billion.
Meanwhile, the precious metal’s spot market price has grown roughly 500% since the first gold ETF launch in 2003, as the gold value per ounce stood at $1,925 in the European session on July 7.
Re-adopting the “digital gold” narrative, Bitcoin has departed from its lasting correlation with the risk-on equities market. Thus, it could once again become a hedge against inflation and market turbulence.
One could have applied the earlier mentioned comment from the editor of Gold Newsletter to Bitcoin as well as gold. “Democratizing the management of money” was the alleged purpose of creating cryptocurrency in the first place.
However, the SEC’s approval of a Bitcoin spot ETF is not a given.
Experts foresee a Bitcoin ETF approval underway
To be clear, the SEC has NOT yet approved one within the US. However, given BlackRock’s track record (1 ETF rejection against over 570 approvals), some experts believe the SEC will play along.
Moreover, BlackRock included a “surveillance-sharing agreement” with Coinbase in its proposal, which is possibly designed to “butter up” the SEC officials.
Dave Weisberger, chief executive and co-founder of trading platform CoinRoutes, told Financial Times he believed “the BlackRock ETF is likely to be approved.” BlackRock has “pretty much undercut all the SEC’s arguments other than ‘meh, we don’t like Bitcoin,’ so I think they have a very reasonable chance,” he added.
Analysts from brokerage firm Bernstein agreed, concluding the following:
SEC would rather bring in a regulated bitcoin ETF led by more mainstream Wall Street participants and with surveillance from existing regulated exchanges, than having to deal with a Grayscale OTC product filling the institutional gap. read the Bernstein report.
As of publication, Bitcoin traded at over $31,100, still unable to break the support-turned-resistance, relevant since late 2020.
