The Potential Disappointment of Bitcoin ETFs in 2024: JPMorgan Downgrades Coinbase

The report stated that the catalyst of the bitcoin ETF, which lifted the ecosystem out of its crypto winter last year, will fail to meet investors' expectations in 2024.

Coinbase’s stock plummeted after JPMorgan downgraded it to underweight due to a disappointing Bitcoin ETF catalyst.

📷

In a research report released on Monday, JPMorgan raised concerns about the potential disappointment and reversal of fortunes for investors in the crypto market, specifically related to the launch of spot bitcoin ETFs in 2024. As a result, the bank downgraded U.S. exchange Coinbase (COIN) from neutral to underweight.

Despite Coinbase’s progress in important initiatives and being recognized as the dominant U.S. exchange in the crypto ecosystem, JPMorgan believes that the catalyst in bitcoin ETFs that sparked the crypto market’s growth in the past year will fall short of market participants’ expectations.

The approval of spot bitcoin ETFs by the Securities and Exchange Commission (SEC) last month was initially expected to herald a new era for cryptocurrencies, with mainstream money pouring into the space. The launch of these products enabled investors who were previously prohibited from owning digital assets to gain access to the sector without having to directly own the underlying assets themselves.

• SEC attributes social media account hack to SIM swap attack in fraudulent Bitcoin ETF post.
• Bitcoin Spot ETF Approval Sends Ripples Through Asia
• Ark Invest Buys an Additional $21 Million of Bitcoin-based Spot ETF

However, JPMorgan expresses concerns that the enthusiasm for bitcoin ETFs and the anticipated influx of new funds into the cryptocurrency ecosystem could potentially be deflated if there is any disappointment with the ETF fund flows. This, in turn, could lead to lower token prices, decreased trading volume, and reduced ancillary revenue opportunities for firms like Coinbase.

Notably, the bitcoin price is already experiencing pressure, having dropped below $40,000. The bank believes that the cryptocurrency ETF enthusiasm could further decline, exacerbating the downward trend in token prices. It is worth mentioning that Coinbase is also expected to play similar roles in custodian, surveillance, and trading if a spot ether (ETH) ETF is approved.

Since the approval of spot ETFs, the world’s largest cryptocurrency has seen a decline in price, hitting a two-month low on Tuesday. The recent dumping of $1 billion worth of the Grayscale Bitcoin Trust (GBTC) by FTX’s bankruptcy estate, following its conversion to an ETF, has also added selling pressure to the underlying digital asset.

Q&A: Readers’ Concerns Addressed

Q: What impact does the downgrade of Coinbase by JPMorgan have on the crypto market?

A: The downgrade of Coinbase by JPMorgan reflects concerns regarding the potential disappointment surrounding the launch of spot bitcoin ETFs in 2024. It may lead to decreased confidence and investment in the crypto market, resulting in lower token prices and reduced trading volumes.

Q: Will the approval of a spot ether (ETH) ETF have a similar effect on Coinbase?

A: Yes, according to the JPMorgan report, Coinbase is expected to assume similar roles in custody, surveillance, and trading if a spot ether ETF is approved. Therefore, any disappointment or deflation in enthusiasm for cryptocurrency ETFs could impact not only Bitcoin but also other digital assets like Ethereum.

Q: What is the current state of the bitcoin price?

A: The bitcoin price has experienced a decline and is currently under pressure, falling below $40,000. This decline in price adds to concerns about the potential deflation of cryptocurrency ETF enthusiasm and its impact on token prices and trading volumes.

Future Outlook and Investment Recommendations

Based on the analysis provided by JPMorgan, it is crucial for investors to carefully monitor the progress and impact of bitcoin ETFs in the crypto market. While the initial launch of spot bitcoin ETFs generated significant enthusiasm and brought new participants into the market, the potential disappointment in ETF fund flows could have adverse effects.

Investors should consider diversifying their portfolios beyond cryptocurrencies and taking a cautious approach, especially until the long-term impact of bitcoin ETFs becomes clearer. By staying informed and analyzing market trends, investors can make more informed decisions and navigate potential market fluctuations.

📚 References:

1. Bitcoin Price | BTC Price Index and Live Chart – Blocking.net
2. Fake Bitcoin ETF Approval Tweet Gives Sneak Peek at ETH Price Spike – Ethereum ETF Approval
3. Crypto Miners Bitcoin Reserves Hit Lowest Level Amidst Increased Selling Pressure
4. Coinbase Will Benefit From Spot Bitcoin ETF Approval: Wedbush
5. In FTX’s Bankruptcy Estate, $22 Million of GBTC Shares Sold, Leading to $1 Billion GBTC Outflow

Remember to 🔁 share this article on social media and spread the knowledge and insights with others.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Please consult with a professional financial advisor before making any investment decisions.

We will continue to update Blocking; if you have any questions or suggestions, please contact us!