Research from Tyr Capital Arbitrage SP refutes JPMorgan’s claim that a
Bitcoin ETF holds negative connotations for BTC's price.
Strategists at JPMorgan Chase caused quite the stir in January when they informed clients that the approval of a Bitcoin (BTC)
exchange-traded fund, or ETF, would be a short-term headwind for the
digital asset. A United Kingdom-based cryptocurrency hedge fund manager
is attempting to pour cold water on those claims, asserting that
JPMorgan’s analysis isn’t based on quantitative analysis or in-depth
research.
The crux of JPMorgan’s argument is that a new institutional-grade ETF would introduce competition for Grayscale Bitcoin Trust, or GBTC, which has amassed
over $22 billion in assets under management. The bank’s strategists say
that the new ETF could lead to a cascade of GBTC outflows and cut into
the premium.
GBTC boasts a large premium over Bitcoin largely
because of its dominant position in the market. Institutional investors
that want exposure to the digital asset without having to buy it
outright have few options outside of GBTC.
Tyr Capital Arbitrage
SP has completed a detailed refutation to JPMorgan's claims. The fund
manager told Cointelegraph: “We disagree with the JPM assessment” on
grounds that there is no evidence suggesting that a decrease in the GBTC
premium will lead to negative short-term returns for BTC.
“Instead
we found evidence of the opposite, namely a decrease in the GBTC
Premium tends to be followed by short term gains in Bitcoin,” Tyr says
in its yet-to-be-released report.
The report continues:
“We
found no evidence that supply originating from the 'new' shareholders
affects the premium in any meaningful way. [...] We found, instead,
evidence that supply originating from existing or 'old' shareholders is
negatively affecting the premium (effectively 'front running' or
discounting the effect the 'new' shareholders will eventually have).”
Nick
Metzidakis, Tyr Capital’s research lead, told Cointelegraph that his
analysis of GBTC’s premium history over the past five years suggests
that a “decrease in the premium has a positive impact on Bitcoin.”
As
for Grayscale Bitcoin Trust, Metzidakis said that increased competition
may affect its market share but that its assets under management will
likely continue to rise as more investors allocate to Bitcoin.
Despite
rumblings to the contrary, Metzidakis doesn’t believe the United States
Securities and Exchange Commission will greenlight a Bitcoin ETF this
year. That being said, the growth of crypto as an asset class “may
encourage regulators to fast track their acceptance of a Bitcoin ETF as
they are motivated to provide a safe and controlled point of access” to
the new asset class.
He continued:
“Institutional
adoption of Bitcoin can only be positive for the price of Bitcoin in the
long run yet it may increase its correlation to other asset classes.
That would especially be the case in times of crisis.“
