Legal Action Threatened if SEC Rejects Bitcoin ETF Applications
JPMorgan analysts have warned that the United States Securities and Exchange Commission (SEC) may face legal action if it rejects spot bitcoin exchange-traded fund (ETF) applications. While a rejection is unlikely, it remains a possibility, according to Nikolaos Panigirtzoglou, lead analyst at JPMorgan. The analysts believe that the SEC would be unwilling to engage in another legal battle over the issue of spot bitcoin ETF approval.
Last month, the SEC lost a case against Grayscale Investments, resulting in a court ruling that favored the crypto asset manager. The ruling mandated the SEC to reconsider Grayscale’s application to convert its bitcoin trust into a spot bitcoin ETF.
JPMorgan expects multiple spot bitcoin ETF approvals within the next few months. The firm noted that asset managers are making progress with the SEC by addressing concerns related to market manipulation and customer funds.
Bitcoin Rally Driven by Institutional Demand
The recent surge in bitcoin’s price, rising nearly 20% in the past week, is attributed to growing optimism about the approval of a spot bitcoin ETF and institutional demand. JPMorgan analysts stated that this rally is primarily driven by institutional investors rather than retail investors.
Evidence of institutional demand includes a spike in futures positions on CME bitcoin futures, which are predominantly used by institutional investors. Additionally, there has been a significant increase in bitcoin inflows into larger wallets, further indicating institutional investor interest.
Hot Take: Institutional Demand Fuels Bitcoin Rally
The potential approval of a spot bitcoin ETF and increasing institutional demand have propelled bitcoin’s recent rally. Institutional investors are driving this surge, as evidenced by the spike in futures positions on CME bitcoin futures and the influx of bitcoin into larger wallets. While the SEC may face legal action if it rejects ETF applications, JPMorgan expects multiple approvals in the coming months. This surge in institutional interest marks a shift from previous retail-driven performances and highlights the growing acceptance of bitcoin as a mainstream investment asset.
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