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On Bitcoin ETFs earning US approval, here is what Binance & JPMorgan are saying

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JPMorgan sees a significant rotation from existing crypto products into the newly created Bitcoin ETFs

Binance CEO Richard Teng said that the first United States-listed spot Bitcoin ETFs getting approved signals a new level of crypto market acceptance, maturity, and mainstreaming.

After replacing Changpeng Zhao (CZ) as Binance’s CEO in November 2023, Richard Teng remarked, “The SEC’s approval of Bitcoin ETFs is likely to fuel the expansion of crypto competencies within financial institutions.”

The banking sector is adopting cryptocurrencies and blockchain technology, which supports this view.

Richard Teng said the mainstreaming of the crypto industry will increase demand for blockchain and cryptocurrency traders and regulatory compliance expertise.

Binance believes this is part of a larger trend where traditional financial institutions recognise digital assets and blockchain technology. He also expects the business to flourish and includes crypto-related roles in these organisations.

“Binance believes that this development is a testament to regulatory progress in this field and adds credibility to the industry, making it more attractive to institutional and retail investors,” he said.

He claimed Bitcoin ETFs will make access easier, attract more investors, and boost liquidity, as gold ETFs did in 2004, with favourable price action.

He said, “This holds especially true in light of the coinciding Bitcoin Halving event this year.”

Bitcoin halves miners’ coin earnings.

Richard Teng also noted that the clearance could spur financial institutions and investment businesses to explore a wider range of crypto products beyond crypto ETFs.

He said the move boosts market trust and that Binance is looking forward to milestones like the SEC’s May decision on Ether (ETH) ETFs and traditional finance’s interest in digital assets.

After the SEC approved spot Bitcoin ETFs in January 2024, experts told Zawya that conventional financial institutions had been expanding crypto and blockchain operations and expected results in 2024.

AsiaNext, an institution-only digital asset exchange in Singapore, launched crypto derivatives trading recently, calling it a “crucial development” for institutional investors.

Meanwhile, in its latest market research report, American financial services biggie JP Morgan sees significant funds from other crypto products to be poured into the Bitcoin ETFs.

JP Morgan, however, noted a muted reaction from the American stock markets on the United States Securities and Exchange Commission approving the Bitcoin ETFs, as the focus now shifts to how much capital these new exchange-traded funds will pull in.

“We are sceptical 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 noted.

Still, JPMorgan sees a significant rotation from existing crypto products into the newly created Bitcoin ETFs. So in case no new capital enters the cryptocurrency market, these ETFs may still attract inflows of up to USD 36 billion.

JPMorgan also predicts that about USD 3 billion may exit the Grayscale Bitcoin Trust (GBTC) and migrate to the new spot ETFs as a result of investors taking profit after buying discounted GBTC shares in the secondary market in 2023. The financial services giant also sees up to USD 20 billion from retail investors migrating from digital wallets held at crypto exchanges to the new ETFs.

Grayscale’s high fees could also trigger outflows, and unless it lowers its rates toward the level set by Blackrock (BLK) and other providers, “a lot more capital, perhaps an additional USD 5 billion-10 billion could exit GBTC relatively quickly to migrate towards cheaper spot bitcoin ETFs,” the bank added.

Institutional investors that hold their crypto in fund format could shift from futures-based ETFs and GBTC to cheaper spot ETFs, especially if GBTC is slow to cut its fees, JPMorgan concluded.

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