JPMorgan: Cryptocurrency market becoming more sensitive to macro factors, awaiting the next catalyst

JPMorgan analysts have analyzed key catalysts that may impact the cryptocurrency market in the coming months, including the seasonal "Uptober" trend, Federal Reserve interest rate cuts, Bitcoin ETF options trading, and the Ethereum "Pectra" upgrade. Despite the potential provided by historical trends and structural developments, the market remains sensitive to macroeconomic factors and is awaiting clearer growth catalysts.

Cryptocurrency Market in October: More Gains than Losses

Based on historical trends, October has been a strong month for Bitcoin, often referred to as "Uptober." Bitcoin has seen positive returns in over 70% of Octobers historically.

While past performance is not indicative of future results, analysts at JPMorgan suggest that the psychological expectation of "Uptober" could influence Bitcoin's performance and lead to a positive October this year.

Fed Rate Cuts Yet to Impact Cryptocurrency

Despite the recent cycle of rate cuts by the Federal Reserve, the expected positive impact on the cryptocurrency market has not materialized. While a lower interest rate environment typically supports risk assets, the correlation between total cryptocurrency market capitalization and the federal funds rate remains weak at 0.46. JPMorgan suggests that the market may be waiting for more sustained stability before decisively shifting.

However, analysts also acknowledge that cryptocurrency assets only emerged in the early to mid-2010s, lacking sufficient historical data to predict how cryptocurrencies would respond to interest rate cycles, especially considering that cryptocurrencies have mostly existed in a near-zero interest rate environment.

Bitcoin ETF Options Could Enhance Market Liquidity

The U.S. Securities and Exchange Commission (SEC) approved the listing and trading of options for the Bitwise BlackRock Bitcoin Spot ETF (IBIT) at the end of September, which analysts believe could deepen liquidity and attract new participants to the market. They noted:

Through options, investors can now engage with ETFs in a more dynamic way and enhance the liquidity of the underlying assets.

This development could trigger a positive feedback loop, strengthen market structure, and make digital assets more accessible to institutional investors. However, this product still requires approval from the Office of the Comptroller of the Currency (OCC) and the Commodity Futures Trading Commission (CFTC).

How will the SEC's approval of IBIT options listing impact Bitcoin?

Pectra Upgrade Could Have Long-Term Impact on Ethereum

The planned Ethereum Pectra upgrade set for early 2025 is expected to bring transformative changes to Ethereum's functionality, but analysts believe this upgrade is more structural than a direct price catalyst.

The long-term impact of Pectra is to enhance Ethereum's operational efficiency and adoption rates, but it is unlikely to trigger a short-term surge in Ether prices.

What are the main risks associated with the Ethereum Pectra upgrade?

Increasing Sensitivity to Macro Factors: Cryptocurrency Market Awaits Next Catalyst

JPMorgan suggests that the crypto ecosystem is becoming increasingly sensitive to macro factors, with the cryptocurrency market currently in a "holding pattern," waiting for clearer macroeconomic or structural catalysts to drive its continued growth.