JPMorgan Chase (NYSE:JPM) analysts have expressed concern over the recent crypto market surge, attributing it to heightened investor expectations spurred by potential SEC approval of spot Bitcoin ETFs and an expected easing of SEC's supervisory approach. As Bitcoin's value surpassed $36,000, edging towards $37,000, the analysts also challenged the likelihood of a relaxed SEC policy post-approval due to the largely unregulated nature of the industry.
The analysts foresee new ETFs reallocating existing capital rather than attracting fresh funds. They pointed to muted interest in non-U.S. Bitcoin ETFs as a potential indicator of this trend. Despite recent legal victories for Ripple XRP/USD and Grayscale against the SEC, they cautioned against expecting a substantial regulatory reversal in the crypto industry due to pending US crypto regulations and memories of FTX fraud.
The team also noted that the forthcoming halving cycle in April is impacting crypto markets but is already priced into bitcoin's current value. Amidst historic levels of bitcoin hoarding and future supply pressure, they maintain that any price hikes from the 2024 Bitcoin halving event are already pre-factored into the market.
The market dynamics have taken a further twist as the SEC enters negotiations with Grayscale about converting its BTC fund into a spot Bitcoin ETF, intensifying anticipation around policy relaxation. However, JPMorgan analysts predict these funds will draw from existing bitcoin investments rather than new capital, anticipating a relative value trade.
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