ETF approval may boost Bitcoin’s liquidity, but it won’t be a game changer — JPMorgan

Crypto ETFs to Benefit Bitcoin

A Bitcoin exchange-traded fund (ETF) could bring more liquidity to the crypto markets, according to a report by JPMorgan managing director Nikolaos Panigirtzoglou. Based in London, Panigirtzoglou is part of the global market strategy team and believes that a BTC ETF in the United States could have a similar impact as those seen in Canada and Europe, where spot Bitcoin ETFs have been around for some time.

The report seen by Bloomberg revealed that Bitcoin ETFs have “attracted little investor interest” in other jurisdictions over the past two years, and have not benefited from investor outflows from gold ETFs. Despite this, Panigirtzoglou believes that if an approval is given, it could lead to a migration of trading activity from BTC futures products.

Exploring the Possibilities of Bitcoin ETFs

Panigirtzoglou’s outlook contrasts with the high hopes that accompany the potential approval of a Bitcoin ETF in the United States. On July 6, BlackRock’s CEO, Larry Fink, expressed that investors could turn to Bitcoin as a hedge against inflation and the devaluation of fiat currencies. He stated, “Let’s be clear: Bitcoin is an international asset. It’s not based on any one currency, and so it can represent an asset that people can play as an alternative.” The annual inflation rate for the U.S. was 4.0% for the 12 months ending in May, according to the Labor Department.

BlackRock’s track record of success in filling ETFs has raised the possibility that their Bitcoin ETF application could be successful. Data from Eric Balchunas and James Seyffart at Bloomberg Intelligence shows that only one of the 550 funds filed by the company has been denied to date.

BlackRock’s application was followed by a flurry of refilings with the Securities and Exchange Commission (SEC), with Invesco, Fidelity, WisdomTree and ARK Invest among the contenders vying for regulatory approval. In the past, several applications have been rejected by the SEC.

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