According to crypto news outlet The Block, JPMorgan has recently weighed in among the voices navigating the crypto space, suggesting that a Bitcoin exchange-traded fund (ETF) could be banned by the U.S. Securities and Exchange Commission (SEC). Applications should be rejected.Thank you for reading this post, don't forget to subscribe!
Notably, the implications of the SEC’s decisions on crypto ETFs are wide-ranging, impacting both institutional and retail investors. Recent analysis from JPMorgan provides insight into what could happen if the SEC rejects Bitcoin ETF proposals, potentially triggering a series of legal confrontations with the applicants.
SEC Awaiting Spot Bitcoin ETF Legal Results?
JPMorgan analysts led by Nikolaos Panigertzoglou highlighted in a recent report that the SEC’s refusal to approve spot Bitcoin ETF applications could lead to legal action.
The report said such rejections could pave the way for lawsuits against the US SEC, further “complicating” the regulatory environment. While the likelihood of rejection remains uncertain, Panigirtzoglou said in the interview:
We believe that a new legal battle over the issue of spot Bitcoin ETF approval is not something the SEC will want to face again.
Such forecasts from JPMorgan follow last week’s prediction, where the institution expected multiple spot Bitcoin ETF approvals within the coming months.
The banking giant also acknowledged the progress made by asset managers in their engagement with the SEC. According to the report, these include technical preparations and amended filings addressing concerns such as potential “market manipulation” and “commingling of client funds.”
Bitcoin’s institutional ascent
A deeper look into the report reveals that the recent surge in Bitcoin’s performance is not “just another” rally driven by individual enthusiasts. JPMorgan analysts in particular point to a different catalyst this time: institutional demand.
The analyst revealed that their change is evident when comparing futures position proxies to CME Bitcoin futures – a tool primarily taken by institutional investors.
According to the JPMorgan analyst, the data shows a significant increase over the past week, reaching not only the peak of the year, but also levels reminiscent of the one before the FTX collapse in August 2022. In contrast, the comparable futures position indicator for CME Ethereum futures remains relatively neutral.
Confirming the institutional momentum behind Bitcoin, the JP Morgan analyst also noted significant inflows into large Bitcoin wallets, a trend emphasizing institutional demand.
While this was being reported, Bitcoin took back some of its bullish momentum, falling 3.2% over the past day. However, the asset remains strong overall, rising by 20% in the last 7 days. Over the past two weeks, it has seen an increase of nearly 30%, and is trading above $34,000 at the time of writing.
The price of Bitcoin (BTC) is moving sideways on the 4-hour chart. Source: BTC/USDT on tradingview.com
Featured image from Unsplash, chart from TradingView