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15th November 2023 > > ETFs & JPM.


tl;dr

This nonsense about a short window for SEC approval of a spot BTC ETF is just that – nonsense. J.P. Morgan is being overly pessimistic, in my humble opinion.


Market Snap








Market Wrap

We can all relax a little now. Perpetual futures funding rates are back to neutral from one of the most elevated rates ever seen. There is a net cost to the price of BTC of about $2k brought on by liquidations of leveraged longs, the largest of which cost one person $9.45mm. In my opinion – and I am the first to admit to extreme bias on this topic – this performance is one of remarkable resilience.


The mistake many people make is to forget that markets do not just go up or down in a straight line. We spent months this year trading in a narrow range around $25k, which has allowed a very firm base to form. Plenty of those coins are now in long-term holders’ hands, and there is little prospect they will see the light of day any time soon.


A further period of consolidation at these levels before the fireworks of 2024 begin may prove to be constructive.


Curious Cryptos’ Commentary – Bear market? Who knew?














Curious Cryptos’ Commentary – Spot BTC ETF

There is talk of a narrow window for the approval of a spot BTC ETF that closes next Tuesday 21st November, probably based on this graphic:








The “window” does not close next Tuesday. This concept is simply a pile of unpleasant material ejected from the behind of an animal commonly used for racing.


The SEC makes up its own rules, and it breaks them all the time. But the key point is that deadlines are there for denying an application, not approving it. There are no restrictions on the SEC as to when they can give the go-ahead for a spot BTC ETF.


What is so hard to understand about that?


What we do know is that the SEC does not want to be portrayed as picking winners, for then Gensler really is at risk in keeping his job.


What we also know is that the SEC has been deeply involved in constructive discussions with the sponsors of all twelve applications for a spot BTC ETF sitting in Gensler’s in-tray. How do we know that? Well, amendments keep being filed, amendments which are not being made in a vacuum. Also, and more tellingly, both BlackRock and Ark Invest have stated publicly that they are having constructive discussions with the SEC.


I think the SEC will wait until at least most of the applications can be approved all on the same day. That can happen anytime – it may be sooner, or it may be later than we think or hope for – but it is certainly not restricted to a “next Tuesday or January 2024” deadline, despite what others might tell you.


Curious Cryptos’ Commentary – J.P. Morgan

JPM have issued a research piece pooh-poohing the idea that a spot BTC ETF will have any material impact on the price of BTC. On the contrary, they believe the current rally is overdone, making this a sell the rumour, buy the news event.


The analysts believe that a spot BTC ETF will simply attract existing capital away from current products, though those products remain few and far between. Apart from Grayscale’s BTC Trust (GBTC) I know of no others in the US, but please correct me if I am wrong.


To justify their stance, they point to crypto-related ETFs in Canada and Europe, and state that they have gained “little interest from investors since their inception.”


This is largely true, but it is also a criticism that can be levied at much of the ETF/ETP landscape in Europe. I have little experience of the Canadian market, but I suspect it is much the same.


Unless one has seen BlackRock’s internal estimates for the demand from both retail and institutional investors for a spot BTC ETF, we are all just left guessing. You know my feelings on this specific point. I have no hard evidence for being bullish apart from a strong conviction that BlackRock (the most successful asset manager of all time) is not spending significant amounts of senior management time on a product they think is destined to be mediocre, let alone fail.


Once again, I have asked Larry Fink, CEO of BlackRock, if he is willing to share those internal estimates with me, but I guess he is a touch too busy to respond today. When Lazzers does get back to me, as he surely will, you will be the first to know.

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