JPMorgan: Caution on the Outlook, Cryptocurrency Market Has Lost Upside Catalysts

JPMorgan analysts believe that the recent sell-off is the most significant since the collapse of FTX, with retail investors appearing to be the main sellers. They also mentioned that most of the existing catalysts for upward movement have already been absorbed by the market, leading to a pessimistic outlook for the future.

JPMorgan: Cryptocurrencies to see a "temporary" rebound in August

JPMorgan: Market Has No More Catalysts for Upside

CoinDesk quoted JPMorgan's latest report stating that the positive factors driving the cryptocurrency market's price increase have already been absorbed by the market. Combined with the positioning of the Bitcoin futures market and the potential economic downturn, JPMorgan is more cautious about the performance of digital assets.

Analysts said:

Most of the catalysts driving the rise of BTC and the cryptocurrency market have already been priced in by the market. This week saw the largest sell-off since the FTX collapse in 2022, mainly triggered by a chain reaction in the traditional financial markets. Bitcoin dropped by over 15%, with this sell-off primarily driven by retail investors, while traders exacerbating market volatility through operations such as unwinding positions and establishing short positions.

Are Institutional Investors the Key?

JPMorgan's analysis team pointed out that there are still several factors that could make institutional investors optimistic about Bitcoin and the cryptocurrency market, including Morgan Stanley allowing wealth advisors to offer cryptocurrency investments to clients, the impending conclusion of bankruptcy liquidation, and the possibility of favorable regulatory measures from both U.S. political parties.

Mt. Gox Begins Repaying Debts with Bitcoin BTC and Bitcoin Cash BCH

However, the analysis team still questions whether the aforementioned potential positives have already been reflected in current prices. Analysts currently estimate that the average production cost of Bitcoin is around $49,000. Once it falls below this price, it will put pressure on miners and further affect the price of Bitcoin.

However, a report from JPMorgan cited by The Block is slightly more optimistic. Analysts believe that Bitcoin futures are trading at a higher premium compared to spot prices, indicating confidence among futures investors. Additionally, the cash claims provided by FTX to creditors may further boost demand in the cryptocurrency market.

According to CoinMarketCap, Bitcoin did indeed drop to $48,934 on August 5th but has since rebounded to $60,923, representing a 24.5% increase.