According to analysts, investors will probably prefer to invest in the ETF and leave aside Grayscale shares
A report released this week by JP Morgan strategists states that an ETF Bitcoin, while beneficial in the long term, may harm digital currency in the short term. The result could be negative for the price of cryptomime, analysts said.
According to the report, an approval of a Bitcoin System will compete in the market with the world’s largest fund of crypto currency, the Grayscale Bitcoin Trust (GBTC).
For JP Morgan analysts, regulatory issues prevent financial institutions from buying Bitcoin directly.
Therefore, the only option is to invest in Bitcoin by buying GBTC shares in the secondary market. A Bitcoin ETF can reduce the attractiveness of GBTC shares.
Thus there would be a competition that, although beneficial in the long term, would negatively impact the price of cryptomeda in the short term.
According to analysts, investors will probably prefer to invest in the ETF and leave aside GBTC shares.
It is worth noting that investors have been buying the GBTC mainly due to the net asset value, with a focus on selling after the expiration of the mandatory six-month blockade period.
A „competition“ with an ETF, according to JP Morgan analysts, may cause a devaluation in the price of Bitcoin.
Coincidence or not, this possibility raised by JP Morgan resembles the launch of Bitcoin futures contracts in December 2017, which also coincided with the price of cryptomeda reaching a record at the time, reaching $ 20,000.
In December 2017 CME and CBOE launched the first Bitcoin futures contracts on the market, which made it possible for institutional investors to sell the asset, however, about two months later, the price of Bitcoin fell by 84% to US$ 3,200.
What is an ETF?
An ETF is a fund that can be traded on the stock market as a stock. With ETFs it is possible to invest buying and selling a basket of assets without having to buy all the components individually.
To understand how an ETF works, let’s see the following example: The responsible for the fund has the underlying assets, so he designs a fund to follow its performance and with this he sells the shares of this fund to investors.
The shareholders in turn become owners of a part of an ETF, but actually do not have the underlying assets of the fund. However, even so, these investors receive fixed dividend payments, or reinvestments, for the shares that comprise the ETF.