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Wall Street is quite notorious for not always walking the talk: its analysts might publicly recommend a particular course of action, but that does not necessarily mean that the banks’ internal trading teams follow that “fount of wisdom.” A recent investment note from JP Morgan has again raised the proverbial hackles of Bitcoin bulls, especially as the note hammers on a thesis that is superficially accurate but lacks proper context.
Short Coinbase $COIN, says JPMorgan, as Bitcoin ETF volumes disappoint:
“Highlighting our more bearish view on COIN, with 2024 expected to be more challenging with the key catalyst of a Bitcoin ETF passing, and limited evidence of a volume follow through.
After a long awaited…
— Stock Talk (@stocktalkweekly) February 12, 2024
JP Morgan has claimed in a new investment note that the spot Bitcoin ETFs attracted $1.5 billion in inflows through the end of January, “considerably less than the flows seen in the weeks after Gold ETFs launched in 2004.” So, “with limited evidence of a volume follow through,” the Wall Street behemoth has urged investors to short Coinbase as a proxy for Bitcoin.
$GLD flows year 1-3 were $1.2b, $2.4b, $3.6b. Added up that’s $7.2b in its first three years. The Nine have taken in $8.2b in first 20 days. $IBIT alone is already half way to GLD’s first 3yrs. Ex-$GBTC tho it’s +$2.7b. And inflation adjusted GLD higher but still it’s a blowout.
— Eric Balchunas (@EricBalchunas) February 10, 2024
Yet, this simplistic narrative needs to be properly contextualized, as was done by none other than Bloomberg’s Eric Balchunas. While the Bloomberg analyst concedes that cumulative net inflows are currently at $2.7 billion (other sources place this number at $2.23 billion), which is below the inflation-adjusted initial inflows in Gold ETFs, by excluding the Grayscale Bitcoin Trust ETF (GBTC) that is facing idiosyncratic issues and including the “big nine” out of the eleven total spot Bitcoin ETFs launched, we get inflows of $8.2 billion in the first twenty days alone! For context, Gold ETFs managed to attract $7.2 billion in inflows over their first three years. This means that the launch of these ETFs has not been a disappointment by any definition.
₿𝗥𝗘𝗔𝗞𝗜𝗡𝗚: Wall Street ETFs are buying 12.5x more #bitcoin per day than the network can produce, increasing the demand and price.pic.twitter.com/RHmkGw8k1o
— Documenting ₿itcoin 📄 (@DocumentingBTC) February 12, 2024
In fact, the spot Bitcoin ETFs are now buying up around 12.5x more Bitcoin each day than can be produced via mining. This is a phenomenal tailwind, which is expected to play an important role in boosting the world’s top cryptocurrency by market capitalization to the $52,000 price level in February, as per a note by 10x Research.
Bitcoin ETF inflows are accelerating pic.twitter.com/zgovvX8dDt
— zerohedge (@zerohedge) February 12, 2024
While we are sure JP Morgan has a perfectly reasonable explanation for recommending a short on Coinbase, we can’t help but remain a tad skeptical, especially given Bitcoin’s upcoming halving event and expectations of rip-roaring gains ahead. In fact, as we noted in an earlier post, Bernstein analysts believe that “Bitcoin’s best days are yet to happen as the ETF-driven market fuels fears of missing out (FOMO).”