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JP Morgan Expects Crypto Products To Create Inflow Into ETFs

According to a report from CoinDesk, a research report by J.P. Morgan states that it remains unclear how much fresh capital will be attracted by the newly approved spot Bitcoin exchange-traded funds (ETF). However, the report suggests that significant funds from other crypto products are expected to pour in. Even though the market reaction to the U.S. Securities and Exchange Commission's (SEC) approval of spot Bitcoin ETFs has been relatively muted, attention has now turned to the amount of capital these new ETFs will pull in.

While many market participants remain optimistic about the inflow of new capital into the crypto space, analysts at J.P. Morgan led by Nikolaos Panigirtzoglou expressed skepticism.

They wrote, "We are skeptical of the optimism shared by many market participants at the moment that a lot of fresh capital will enter the crypto space as a result of the spot Bitcoin ETF approval."

However, the bank does anticipate a significant rotation from existing crypto products into the newly created ETFs. Therefore, even if no new capital enters the cryptocurrency market, the new ETFs could still attract inflows of up to $36 billion.

It has been reported that the Grayscale Bitcoin Trust (GBTC) could lose up to $3 billion as investors take profits and migrate to the new spot ETFs. Additionally, the bank predicts that up to $20 billion from retail investors could migrate from digital wallets held at crypto exchanges to the new ETFs. The bank attributes these outflows to Grayscale's high fees, which are much higher than those of Blackrock (BLK) and other providers. If Grayscale does not lower its fees, institutional investors could shift from futures-based ETFs and GBTC to cheaper spot ETFs.

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