New Bitcoin Spot ETF Attracting Capital from Other Products, Says JPMorgan

Even before the Bitcoin spot ETF was approved, industry experts had already predicted that it would be high in demand. Given how many years companies in the crypto space pursued an ETF, that was to be expected. But now, a report from JPMorgan casts light on just how popular the new crop of spot Bitcoin ETFs has been. As per the report, a lot of the capital already invested in other Bitcoin products could be moved to the ETF.

Crypto Capital Being Moved

One of the first things that the report tackled was the belief that new capital will enter the market because of the ETFs. Some had believed that once the ETFs launched, investments that had not previously been earmarked for cryptocurrency would be invested in this. But the research team at JPMorgan is not completely convinced.

“We are skeptical of the optimism shared by many market participants at the moment that a lot of fresh capital will enter the crypto space as a result of the spot bitcoin ETF approval,” the report says.

The crypto market has been in existence for years and it might just be the case that institutional investors who would have embraced digital assets have started doing so already. And while the ETFs are still groundbreaking, they might not immediately have the effect of new investments some had hoped for.

But this doesn’t mean that no investments are being made in these ETFs. Grayscale alone has seen billions of dollars in investment in less than a week of its ETF going live. JPMorgan, curiously, predicts that a lot of money currently invested in other crypto instruments will be re-directed to the Bitcoin spot ETF.

For example, the report notes $3 billion that could be taken from the Grayscale Bitcoin Trust (GBTC) and invested in Bitcoin ETFs after making a profit from it. Part of this is, naturally, the appeal of the spot ETF. Many investors had been waiting for a chance to invest in spot Bitcoin ETFs but opted for other options like futures ETFs that were already in the market. But now that the former is available, they might just switch gears. On top of this, there is the issue of the high fees that Grayscale’s Trust charges, which is less favorable compared to spot ETFs.

If this fee structure does not change, we could see a shift in the popularity of other Bitcoin investment vehicles. Overall, JP Morgan believes that Bitcoin spot ETFs could bring in as much as $36 billion, which is no small feat. Most of the crypto world already expected the ETFs to be disruptive and it seems that this is happening in more ways than one.