A UK-based hedge fund has refuted claims made by JPMorgan Chase that a bitcoin exchange-traded fund (ETF) would hurt the price in the short-term.
In a client note distributed in January, JPMorgan strategists said the approval of a Bitcoin ETF would negatively impact BTC’s price in the near-term.
The Wall Street analysts argued an institutional-grade ETF would introduce competition to Grayscale’s flagship Bitcoin Trust (GBTC) product, which holds more than $24 billion in assets under management.
02/04/21 UPDATE: Net Assets Under Management, Holdings per Share, and Market Price per Share for our Investment Products.
— Grayscale (@Grayscale) February 4, 2021
The note explained an ETF would lead to an outflow from the fund while cutting into the Trust’s premiums.
Crypto hedge fund Tyr Capital Arbitrage SP conducted a refutation to JPMorgan’s claims, that they “disagree” with the evaluation. According to Tyr, there is no evidence suggesting a decrease in GBTC premiums would lead to negative short-term returns for Bitcoin.
The fund manager said of the yet-to-be-released report: “Instead we found evidence of the opposite, namely a decrease in the GBTC Premium tends to be followed by short term gains in Bitcoin.”
Their report goes on to say: “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).”