Blackrock’s Bitcoin ETF: JP Morgan’s Damage Limitation?

Last Updated: 8 January 2024

• Blackrock’s announcement to file for a Spot Bitcoin ETF caused excitement in the crypto market.
• JP Morgan released a report that argued that the Spot Bitcoin ETF is unlikely to be a game changer for crypto markets.
• JP Morgan attempted damage limitation in its report, arguing that the only disadvantage of a Spot ETF was that it could take away from existing Futures ETFs.

Blackrock’s Announcement of Spot Bitcoin ETF

Recently, Blackrock, the world’s biggest asset manager, announced its filing for a Spot Bitcoin Exchange Traded Fund (ETF). This news created an atmosphere of hope and optimism in the cryptocurrency market as investors believed this could be the spark needed to ignite another crypto bull run. The positive comments made by CEO Larry Fink on national television only added fuel to the fire.

JP Morgan Report Attempts Damage Limitation

In response to this news, strategists at JP Morgan released a report titled “U.S: Crypto-Assets: Game Changer or Just Another Liability?” Its main argument was that since Spot Bitcoin ETFs already exist in Canada and Europe yet have not gained much investor interest, this suggests it is unlikely to bring about any significant change in crypto markets if approved. Furthermore, they believe there are only marginal benefits of a Spot ETF over Futures ETFs and suggested that instead of investing into them retail investors should use existing Futures products instead.

Arguments Against JP Morgan Report

The arguments put forward by strategists at JP Morgan appear somewhat flawed as traditional finance employs both types of ETFs (Spot & Futures) as tools for different types of investor activity so it is not necessarily true that one product would replace another completely.

JP Morgan Sees Writing on Wall

It seems clear from their attempts at damage limitation through their report that JP Morgan understands what approval of such an ETF could mean for commercial banking systems if institutions and retail investors were convinced to invest into bitcoin products due to their deterioration in faith against all fiat currencies. Despite CEO Jamie Dimon’s “pet rock” references regarding bitcoin, his comments are beginning to become embarrassing given that JP Morgan is ultimately an institution built on making money – and staying out of bitcoin investments may prove costly down the line.

Conclusion

Overall, it appears impossible for banks like JP Morgan to ignore what potential approval of such an exchange traded fund might mean for cryptocurrency markets – and with every day passing without any signs of institutional adoption growing, it looks more likely than ever before that something like this might actually happen soon enough.

Author
  • Florian Feidenfelder

    Florian Feidenfelder is a seasoned cryptocurrency trader and technical analyst with over 10 years of hands-on experience analyzing and investing in digital asset markets. After obtaining his bachelor's degree in Finance from the London School of Economics, he worked for major investment banks like JP Morgan, helping build trading systems and risk models for blockchain assets.

    Florian later founded Crypto Insights, a leading research firm providing actionable intelligence on crypto investments to hedge funds and family offices worldwide. He is the author of the bestseller "Mastering Bitcoin Trading" and has been featured in prominent publications like the Wall Street Journal, Bloomberg, and Barron's for his insights on blockchain technologies.

    With extensive knowledge spanning the early days of Bitcoin to today's explosive DeFi landscape, Florian lends his real-world expertise to guide both new entrants and seasoned professionals in capitalizing on the wealth-creating potential of crypto trading while effectively managing its inherent volatility risks.

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