JPMorgan Chase (NYSE:JPM) analysts have expressed concern over the recent surge in the crypto market, attributing it to heightened investor expectations spurred by the potential SEC approval of spot bitcoin ETFs and an expected easing of the SEC‘s regulatory approach. As bitcoin’s value surpassed $36,000 and approached $37,000, the analysts also questioned the likelihood of relaxed SEC policy post-approval due to the largely unregulated nature of the industry.
The analysts expect new ETFs to redeploy existing capital rather than attract new 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 significant regulatory reversal in the crypto industry due to pending U.S. crypto regulations and memories of the FTX fraud.
The team also noted that the upcoming April half year cycle is impacting crypto markets, but is already priced into bitcoin’s current value. Amid historic levels of bitcoin hoarding and future supply pressures, they contend that any price increases from the 2024 bitcoin halving event are already priced into the market.
Market dynamics have taken another twist as the SEC begins negotiations with Grayscale to convert its BTC fund into a spot bitcoin ETF, adding to expectations of policy easing. However, JPMorgan analysts predict that these funds will draw from existing bitcoin investments rather than new capital, anticipating a relative value trade.
