JPMorgan analysts remain cautious about the crypto market, citing several concerns that cloud the market's immediate future.
This cautious perspective from JPMorgan serves as an important guide for investors navigating the volatile crypto market.
JP Morgan analyst talks about factors influencing the crypto market
Nikolaos Panigirtzoglou, head of the analysis team, highlights the triple threat of rising Bitcoin prices, declining retail interest, and cooling venture capital funding as the main reasons for the conservative outlook. .
“We remain cautious on the crypto market in the near term due to the lack of positive news and the loss of retail appetite,” JPMorgan analysts said.
Despite optimistic forecasts that the decline would come to an end as of August 2023, recent trends have shown a sharp reversal. In April, Bitcoin experienced a steep 16% drop, its biggest monthly decline since June 2022. As a result, this decline coincides with widespread apathy among retail investors who have exited the crypto and stock markets.
Read more: Bitcoin Price Prediction 2024/2025/2030
This waning enthusiasm is evident in the outflows recorded in the US-based Spot Bitcoin Exchange Traded Fund (ETF).
Specifically, as of May 1st, these 11 ETFs had seen a total of $563.7 million in net outflows. This is the highest ETF withdrawal rate ever.
The lack of new investment in BlackRock's iShares Bitcoin Trust (IBIT) further supports this trend. IBIT has not seen any inflows in the past seven business days.
Similarly, equity funds also reported net outflows, reversing the inflow trend observed in the early months of February and March.
Changes in investor sentiment can be partially attributed to profit-taking activity, particularly among institutional investors. Commodity trading advisors and quantitative funds have pared back previously bullish positions in both Bitcoin and gold, according to JPMorgan. This profit-taking shows that these savvy investors are carefully recalibrating their risk.
In stark contrast to its current cautious stance, JPMorgan previously noted increased Bitcoin futures trading activity in August 2023. Analysts interpreted this as a sign of market stabilization and debated the possibility of a rebound. In fact, Bitcoin hit a new all-time high in March 2024.
Read more: Where to trade Bitcoin futures: A comprehensive guide
However, the recent decline is prompting a reassessment of the market's trajectory.
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