Bitcoin soars to 18-month high, crypto stocks follow, but rally seen as ‘overdone’ by analysts

Bitcoin’s value vaulted to a new 18-month high above $38,000 on Thursday as cryptocurrency bulls doubled down on bets that U.S. regulators will finally approve a spot bitcoin exchange-traded fund (ETF) this year despite persistent doubts from Wall Street analysts.

Strategists at J.P. Morgan said in a research note that they do not expect a spot bitcoin ETF approval to attract significant fresh capital inflows. The analysts believe investments would likely shift from existing bitcoin vehicles like the Grayscale Bitcoin Trust into any newly approved spot ETFs.

Moreover, J.P. Morgan strategists pointed out that similar Bitcoin spot ETFs already trade in Canada and Europe but have not gained much traction. This casts doubt on expectations for major U.S. demand should an American spot Bitcoin ETF be approved.

On the regulatory front, the J.P. Morgan note said analysts do not anticipate any major shift in the SEC’s stance toward cryptocurrencies even if a spot bitcoin ETF is given the green light. This view is informed by the recent FTX collapse and alleged fraud by its founder Sam Bankman-Fried.

Shares of cryptocurrency and blockchain firms have climbed alongside Bitcoin’s recent gains. For instance, Coinbase Global – the largest U.S. crypto exchange – rose 7.4% to a three-week high on Thursday. Other companies like Marathon Digital and Riot Platforms also saw double-digit share price increases.

For now, the gap between Wall Street’s sceptical stance and Main Street’s optimism appears to be widening. While analysts insist the crypto rally is overblown, Bitcoin evangelists remain laser-focused on what they see as an inevitable ETF green light that could cement cryptocurrency’s establishment as a legitimate asset class.