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Morgan Stanley: Spot Bitcoin ETFs Could Reshape Global Crypto Mindset

2 min read

The crypto landscape has changed dramatically in recent years. Stablecoin volume has challenged traditional payments giants such as PayPal and Visa.

Wall Street is now showing great interest in this shift, particularly with the emergence of spot Bitcoin (BTC) ETFs.

According to Andrew Peel, head of digital asset markets at investment banking giant Morgan Stanley, this development could represent a “potential paradigm shift in the global perception and use of digital assets.”

In a recent note to investors, Peel examined the current challenges facing the U.S. dollar as the world’s primary reserve currency, with 60% of global foreign exchange reserves denominated in dollars.

In stark contrast, China’s yuan accounts for just 2.5% of these reserves, despite the country’s efforts to strengthen its position in international trade.

Peel cited several factors contributing to the erosion of the dollar’s dominance, including the “remarkable” global adoption of Bitcoin, with an estimated 100 million people worldwide owning the cryptocurrency and Bitcoin ATMs operating in 82 countries.

In particular, large companies such as Tesla and even a sovereign state, El Salvador, have adopted Bitcoin.

Still, Peel emphasized that stablecoins could turn out to be a “killer application” of cryptocurrency.

Stablecoin trading volumes have reached levels comparable to established digital clearinghouses such as Visa and PayPal.

Even Visa and PayPal themselves have ventured into the stablecoin arena, with Visa integrating USDC on Solana and PayPal launching the stablecoin PYUSD.

JPMorgan expects rotating capital movements

Contrary to expectations of a massive inflow of fresh capital, analysts at JPMorgan estimate that Bitcoin spot ETFs could see up to $36 billion in inflows redirected from existing cryptocurrency instruments .

According to a note from analysts at JPMorgan, the breakdown of these expected capital movements includes $3 billion from Bitcoin futures-based ETFs, $3 billion to $13 billion from Grayscale Bitcoin Trust (GBTC), and a sizeable $15 billion to $20 billion from retail investors Switch from digital wallets on cryptocurrency exchanges and retail brokerages to on-premise Bitcoin ETFs.

However, analysts led by Nikolaos Panigirtzoglou did not provide a timeframe for these forecast inflows.

JPMorgan analysts expressed skepticism about the widespread optimism among market participants that the approval of spot Bitcoin ETFs could lead to a significant inflow of fresh capital into the cryptocurrency space.

They proposed an alternative perspective that the amount of new capital flowing into the crypto sector is more likely to be influenced by regulatory developments and, in particular, the extent to which regulators allow the crypto ecosystem to merge into the traditional one over time Integrate the financial system.

Last week, the SEC approved 11 spot Bitcoin ETFs, marking a significant departure from more than a decade of regulatory rejection.

The decision has opened the door for major traditional financial giants such as BlackRock, Invesco and Fidelity to provide direct access to funds investing in Bitcoin.

On their first day of trading, Bitcoin ETFs recorded a remarkable trading volume of $4 billion , according to data from Yahoo Finance.

All content in this article is for informational purposes only and in no way serves as investment advice. Investing in cryptocurrencies, commodities and stocks is very risky and can lead to capital losses.
BlackRock (IBIT), the Grayscale Bitcoin Trust (GBTC), Fidelity (FBTC), Ark Invest/21Shares (ARKB), Bitwise (BITB), Franklin (EZBC), Invesco/Galaxy (BTCO), VanEck (HODL), Valkyrie (BRRR), WisdomTree (BTCW), Hashdex (DEFI)