JPMorgan Chase strategists caused a stir in January when they informed clients that approval of a Bitcoin Exchange (BTC) exchange fund, or ETF, would be a short-term obstacle to digital assets. A UK-based cryptocurrency hedge fund manager is trying to dispel these claims, claiming that JPMorgan’s analysis does not rely on quantitative analysis or comprehensive research.

The core of JPMorgan’s argument is that the new ETF will compete with the Grayscale Bitcoin Trust, or GBTC, which has accumulated more than $ 22 billion in total assets. The bank’s strategists say the new ETF could trigger a flurry of GBTC outflows and lower premiums.

GBTC has a large premium over Bitcoin, mainly due to its dominant position in the market. Institutional investors who want access to a digital asset without having to purchase it directly have several options outside of GBTC.

Tyr Capital Arbitrage SP has completed a detailed rebuttal of JPMorgan’s claims. A fund manager said to Cointelegraph, “We do not agree with the JPM’s valuation,” on the basis that there is no evidence that a decline in GBTC premium will lead to a negative short-term return on BTC.

“Instead, we found evidence to the contrary, that is, lower GBTC premiums tend to be followed by short-term gains in Bitcoin,” says the Tirs report, which has not yet been released.

The report continues:

We did not find evidence that the “new” shareholder offer affected the premium in any way. […] Instead, we found evidence that a proposal from current or “old” shareholders negatively affects the bonus (actually “ahead” or without assessing the impact that the “new” shareholders will have in the end).
Nick Mitsidakis, head of research at Tyr Capital, told Cointelegraph that his analysis of GBTC premiums history over the past five years shows that “lower insurance premiums have a positive effect on Bitcoin.”

With regard to the Grayscale Bitcoin Trust, Metzidakis said that increased competition may affect its market share, but that its assets under management will likely continue to grow as more investors invest in Bitcoin.

Despite rumors pointing to the opposite, Metzidakis does not believe the US Securities and Exchange Commission will give the green light to Bitcoin ETFs this year. However, the rise of cryptocurrency as an asset class could “require regulators to accelerate adoption of bitcoin ETFs, as they are interested in providing a safe and controlled access point” for the new asset class.

He continued:

“Institutional adoption of Bitcoin may only be positive for Bitcoin’s price in the long term, but it may increase the link with other asset classes. This is especially true during a crisis.”

Source: CoinTelegraph