JPMorgan Expects a Lot Of Money From Their Current Crypto Products To Flow Into New Spot Bitcoin ETFs

JPMorgan Chase, the largest U.S. bank by assets, believes that the recently approved spot Bitcoin exchange-traded funds (ETFs) in the country could attract significant inflows from existing cryptocurrency investment vehicles, even if they fail to draw much fresh capital into the digital asset space.

In a research report published last Thursday, JPMorgan analysts led by Nikolaos Panigirtzoglou said they were “skeptical” about predictions that the long-awaited spot Bitcoin ETFs would spur huge new crypto investments. However, they estimate that up to $36 billion could migrate from current products like the Grayscale Bitcoin Trust and crypto exchange accounts into the new, lower-cost ETFs.

The analysts see about $3 billion exiting Grayscale to capitalize on discounted shares purchased in the trust’s secondary market over the past year. Up to $20 billion may also shift from retail crypto wallets held at exchanges to ETFs, which offer simpler access without custody and security concerns.

Additionally, unless Grayscale reduces its high management fees closer to the levels BlackRock and other ETF providers charge, JPMorgan believes another $5-10 billion could rapidly leave for cheaper spot Bitcoin ETFs. Institutional investors currently using crypto futures ETFs or Grayscale may similarly opt for lower-cost spot exposure pending fee adjustments.

The projections follow the Securities and Exchange Commission greenlighting spot Bitcoin ETFs from ProShares and Invesco’s VanEck in October after years of rejection. The approvals came despite Chairman Gary Gensler’s hesitations around investor protection with crypto funds.

JPMorgan said the muted price reaction to the long-awaited ETF launch suggests crypto markets were focused elsewhere at the time. However, the upcoming migration of assets between old and new investment vehicles may refocus attention. It remains unclear whether the ETFs can attract crypto newcomers, but their ability to concentrate existing capital more efficiently could still support market growth.