Bitcoin ETF could negatively affect the token’s price for short term

  • Bitcoin ETF could negatively affect the price of the token for short-term
  • There are chances of approval for bitcoin ETF from the new commissioner of the US SEC
  • Bitcoin ETFs could suppress the GBTC premiums

JPMorgan analysts have observed the scenes available presently and claim that the Bitcoin exchange-traded fund (Bitcoin ETF) could hurt the tokens price for a shorter time frame. However, they also mentioned that the price would remain positive in the longer time frame. The scenario of a negative trend could be created as the funds of institutions will be drawn to Wall Street from the Grayscale Bitcoin Trust (GBTC). And this could also help the leading crypto token to gain exposure on Wall Street.

Positive vibes over the US SEC approving Bitcoin ETF

Relating to the approval of Bitcoin ETF, currently, a positive or a distinctive favorable feeling is flowing in the entire cryptosphere. Everyone in the cryptosphere is optimistic about the United States Securities and Exchange Commission (SEC). The likelihood of approval of a Bitcoin ETF has increased, as the previous government has been replaced with the new Biden administration. The fact would benefit Grayscale Bitcoin Trust (GBTC) more than any other, which has no competitor in the town, being the only game.

Financial institutions are restricted to own BTC

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Due to several regulatory pressures and several other restrictions in the United States, few financial corporations and funds cannot directly own Bitcoins. Such firms and funds are even not allowed to purchase shares directly from Grayscale. However, there are some little choices available to get in on the most famous crypto coin action. Still, they only can purchase GBTC shares on the secondary market at a premium. Even so, with a Bitcoin ETF, such a premium would diminish and will reduce the attractiveness of the GBTC shares. According to several analysts, a diminishing GBTC premium could shrink the allure of a widespread trade.

Bitcoin ETF will put downward pressure on GBTC premiums

According to JPMorgan analysts, there are estimations that the GBTC premium monetization trade could report for approximately 15% of its outstanding stock. Observing the estimations of Bitcoin ETF and the shrinking GBTC premiums, it seems it could potentially lead several financial institutions, who purchased after Q2 2020, to sell after the expiring lock-up period of six months. According to analysts, the current situation would further put more downward pressure on GBTC premiums.

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Ahtesham Anis
Ahtesham Anis is a Computer Science undergrad student currently based out of India. Coming from the business background and his keen interest in Cryptocurrency and Blockchain technology is what Ahtesham brings to the table. He is always an eager learner when it comes to exploring the new technologies and topics in the crypto world.

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