The rally in the cryptocurrency market looks excessive and could end abruptly after the expected approval of a Bitcoin ETF. JPMorgan came to this conclusion, writes The Block.
“Caution must be exercised due to the high chances of encountering a buy-on-rumour/sell-on-the-fact effect following the news from the SEC,” – they wrote.
In the current rally, analysts saw hopes that the product’s approval would be seen as a win for the industry, potentially leading to a softening of the Commission’s approach to regulation.
Also, the launch of ETFs is expected to result in an influx of capital into digital assets.
JPMorgan is skeptical about the correctness of such expectations.
“A more likely scenario is that capital from existing Bitcoin products like GBTC will move into the exchange-traded fund. futures ETFs and shares of mining companies. Secondly, similar tools already exist in Canada and Europe. Since their launch they have not attracted much interest,” – the experts explained.
They also doubt that the SEC will change its position regarding supervision of the industry, even after the agency’s defeat in the cases against Ripple and Grayscale.
“It is far from clear that regulatory tightening will ease significantly in the future, given how large the gaps are now. Legislative initiatives in the US are still pending. We do not believe that there will be fundamental changes in the world FTX collapse», – they pointed out.
Analysts are also convinced that the upcoming halving in April 2024 has already been taken into account in digital gold quotes.
“If you look at the cost of Bitcoin production after reducing the reward for miners to the widow, taking into account the current hashrate and difficultywe can assume that costs will increase from $21,000 to ~$43,000. Current price ~$35 000 would correspond to approximately a 20% drop in the total computing power of the network due to the departure of a number of players after the halving. This suggests that the event is largely reflected in the price.” – they pointed out.
Let us recall that in September JPMorgan doubted that the launch of ETFs would change the rules of the game for the crypto market due to the low interest in the product in those jurisdictions where they were allowed.
Later, Matrixport analysts predicted the growth of digital gold as a result of the approval of the instrument to $42,000-56,000. CryptoQuant received values of $50,000-73,000.
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2023-11-09 13:22:26
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