Has Bitcoin Risen Too Far? JPMorgan Refutes Three Reasons for Community Optimism

While the community eagerly anticipates the approval of a Bitcoin spot ETF to bring about a comprehensive bull market in the crypto space, JPMorgan released a research report last week suggesting that the recent price surge expected from this anticipation may have been overdone.

Will Approval of ETFs Help with Inflows of Funds?

JPMorgan stated in a report that the reason the community is optimistic is: Approval of a Bitcoin spot ETF will help the crypto market attract new capital, as approved ETFs would bring in inflows!

However, the report pointed out another possibility:

Existing funds are more likely to move from current Bitcoin products, such as Grayscale's GBTC, Bitcoin futures ETFs, and listed mining companies, to the newly approved spot ETF, rather than new capital entering the cryptocurrency space!

Because Bitcoin spot ETFs have already been introduced in Canada and Europe, but "investor interest has been low since their launch."

Could SEC's Attitude Towards the Crypto Industry Soften?

Another reason the community is optimistic is: A recent court ruling may lead to the SEC softening its stance towards the cryptocurrency industry.

The report stated that while the court rulings involving Ripple and Grayscale represent legal failures for the SEC, "given the unregulated nature of the industry, it is unclear whether regulatory tightening in the cryptocurrency industry will significantly ease."

Analysts wrote:

Regulations in the U.S. cryptocurrency industry are still uncertain, and we believe U.S. lawmakers will not change their stance due to the two legal cases mentioned above, especially with the recent memory of the FTX scam.

Bitcoin Halving Argument Lacks Conviction

JPMorgan also mentioned Bitcoin halving in the report. Bitcoin halving is expected to take place in April or May next year, which is considered another bullish reason for the cryptocurrency market. However, this argument is deemed to be "lacking conviction" as the impact of halving is unpredictable and already priced in.

First Approval Window for Bitcoin Spot ETF Approaching

Bitcoin has been rising steadily from its low point in early September of $24,901 to a high of $37,972, marking an increase of over 50%. The community is still anticipating the first approval window for the Bitcoin spot ETF on 11/17.

Inflation cooling off, U.S. stocks soaring, and the crypto market awaiting the first approval window for a Bitcoin spot ETF