Could the approval of Bitcoin ETFs tank GBTC? The long-awaited spot Bitcoin Exchange-Traded Fund (ETF) approval is looming around the corner. As investors wait for this checking, implications have been predicted despite positive sentiments that have seen BTC prices rise by over 20% in the past months.
The news on ETFs has been seen to influence the crypto market a great deal with anticipated approvals of Bitcoin-spot and Ethereum-spot exchange-traded funds.
It’s been noted by market analysis data and findings by JPMorgan that the anticipated Grayscale Bitcoin-spot ETF approval by the United States Securities and Exchanges Commission (SEC) might negatively influence the GBTC. However, investors are still optimistic about the several currently pending ETF approvals.
GBTC risks losing billions amid ETF approval
Based on analysis by JP Morgan, a significant portion of the Grayscale Bitcoin Trust (GBTC) was traded at a discount in 2023. This was in contrast to the net asset value (NAV).
According to the central authority, the rise in discounted sales indicates a promising signal for GBTC, making it an attractive investment to back based on its intentions of converting spot Bitcoin exchange-traded funds (ETFs).
Nikolaos Panigirtzoglou, an expert crypto analyst and JP Morgans’s managing director commented on the awaited approval for Grayscale’s application. He noted:
Assuming this buying flow was mostly speculative in anticipation of GBTC being converted to an ETF, then it is likely that this $2.7 billion would come out of GBTC as these investors take profit once GBTC gets converted.
Nikolaos Panigirtzoglou
Based on his analysis, Panigirtzoglou mentioned that if the exit of the $2.7 billion from the market becomes a reality, there will be downward pressure on the Bitcoin market price. Regardless, the amount would be exchanged for other Bitcoin investment vehicles, and this will control the pressure on the market price.
Since the beginning of the year, GBTC has seen a significant inflow of investments that have totaled over $2.5 billion, according to JP Morgan. Additionally, the bank notes that an addition of this investor influx is expected to rise in value to $2.7 billion. This is based on considerations of short-interest positions.
The bank anticipates that some of the $2.7 billion investments will exit the market regardless of the awaited approval of exchange-traded funds by the SEC. As a result, the BTC price could be negatively impacted, and a drop in price can be expected.
Other sentiments on the ETF approval
Other analysts have commented on a different view of the implications of the news and state a bull rally for the major crypto that is anticipated by early 2024. Experts predict the BTC price will rally above $40,000 and reach fresh highs not seen since its bull rally in 2021, which saw it reach an all-time high.
Even recent sentiments have hinted at a growth in its price expected over the weekend based on the recent rally it showcased, ranging above $37,700 to $38,000.
Additionally, the next BTC halving event will commence next year, which could signal a bull rally for Bitcoin. This added to the expected spot Bitcoin exchange-traded funds (ETFs) from prominent firms, including BlackRock and VanEck, could positively affect its price.
However, the crypto market is a volatile entity that is significantly affected early by macroeconomic events. Without knowledge of this, it’s still not confirmed that these predictions might be solid.
Considering the benefits that ETFs offer to the crypto market, it’s safe to say that investors are confident in backing these digital products This will increase investment pressure that could improve the status of the digital market. Institution investments could also increase this in turn, pushing BTC’s price to the upside.
