Crypto hedge fund refutes JPMorgan’s claim that Bitcoin ETF is short-term negative for BTC

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Strategists at JPMorgan Chase induced fairly the stir in January after they knowledgeable shoppers that the approval of a Bitcoin (BTC) exchange-traded fund, or ETF, can be a short-term headwind for the digital asset. A United Kingdom-based cryptocurrency hedge fund supervisor is making an attempt to pour chilly water on these claims, asserting that JPMorgan’s evaluation isn’t primarily based on quantitative evaluation or in-depth analysis.

The crux of JPMorgan’s argument is {that a} new institutional-grade ETF would introduce competitors for Grayscale Bitcoin Trust, or GBTC, which has amassed over $22 billion in belongings underneath administration. The financial institution’s strategists say that the brand new ETF might result in a cascade of GBTC outflows and reduce into the premium.

GBTC boasts a big premium over Bitcoin largely due to its dominant place out there. Institutional buyers that need publicity to the digital asset with out having to purchase it outright have few choices exterior of GBTC.

Tyr Capital Arbitrage SP has accomplished an in depth refutation to JPMorgan’s claims. The fund supervisor advised Cointelegraph: “We disagree with the JPM evaluation” on grounds that there isn’t a proof suggesting {that a} lower within the GBTC premium will result in destructive short-term returns for BTC.

“As a substitute we discovered proof of the alternative, specifically a lower within the GBTC Premium tends to be adopted by brief time period beneficial properties in Bitcoin,” Tyr says in its yet-to-be-released report.

The report continues:

“We discovered no proof that offer originating from the ‘new’ shareholders impacts the premium in any significant manner. […] We discovered, as a substitute, proof that offer originating from current or ‘outdated’ shareholders is negatively affecting the premium (successfully ‘entrance operating’ or discounting the impact the ‘new’ shareholders will finally have).”

Nick Metzidakis, Tyr Capital’s analysis lead, advised Cointelegraph that his evaluation of GBTC’s premium historical past over the previous 5 years suggests {that a} “lower within the premium has a constructive impression on Bitcoin.”

As for Grayscale Bitcoin Belief, Metzidakis stated that elevated competitors could have an effect on its market share however that its belongings underneath administration will possible proceed to rise as extra buyers allocate to Bitcoin.

Regardless of rumblings on the contrary, Metzidakis doesn’t consider america Securities and Alternate Fee will greenlight a Bitcoin ETF this yr. That being stated, the expansion of crypto as an asset class “could encourage regulators to quick monitor their acceptance of a Bitcoin ETF as they’re motivated to offer a protected and managed level of entry” to the brand new asset class.

He continued:

“Institutional adoption of Bitcoin can solely be constructive for the value of Bitcoin in the long term but it might improve its correlation to different asset lessons. That may particularly be the case in occasions of disaster.”