JPMorgan: Cryptocurrency sell-off is coming to an end

This article briefly:

Research from JPMorgan suggests that the recent sell-off in cryptocurrencies is drawing to a close, pointing to a promising future for the market.

Research shows that increased demand for Bitcoin futures contracts indicates market optimism for a price increase.

· Although no timetable was set, the report pointed to a slowdown in price declines, suggesting a possible market reversal.

Research from JPMorgan suggests that the recent wave of digital asset sell-offs is coming to an end, which is good news for the cryptocurrency community.

The report states that “the recent sell-off in the cryptocurrency market may be drawing to a close, with liquidation of long positions “basically behind us.”

Bitcoin futures interest, a key indicator

A recent report citing JPMorgan research noted an increase in bitcoin futures trading activity. This suggests that the increase in activity may signal the market is stabilizing after the recent period of sell-off.

Bitcoin 1-month price chart. Source: BeInCrypto

Bitcoin futures are essentially contracts to buy or sell the cryptocurrency bitcoin at a set price on a specific future date and are traded on the Chicago Mercantile Exchange (CME).

The report noted that “the number of futures contracts that are not settled and are active on exchanges” has declined. The drop in open interest points to growing interest in buying bitcoin and suggests that the recent sell-off may be coming to an end.

Open interest refers to the total value of active long-dated and short-dated futures contracts. As CME explains, this is a way of gauging market activity by evaluating the capital invested in the futures market:

“As open interest increases, more money is flowing into futures contracts and as open interest decreases, money is flowing out of futures contracts.”

Total funds allocated in open perpetual bitcoin futures contracts (USD), 1 year. Source: Glassnode

JP Morgan’s view on Bitcoin ETF

According to JPMorgan analyst Nikolaos Panigirtzoglou, this is a sign that the market may soon reverse:

“As such, we see limited near-term downside in the cryptocurrency market.”

It is uncertain when the reversal trend will start. However, the report pointed to a slowdown in the rate of price decline. It noted that “Bitcoin was down 0.2% at around $25,980 as of 11:30 a.m. in New York on Friday.”

Recently, JPMorgan Chase released a report saying that Bitcoin exchange-traded funds (ETFs) will not have a significant impact on the price of Bitcoin.

Panigirtzoglou noted that while the product is already on the market in Europe and Canada, it has yet to attract significant investor interest.

However, the product is currently awaiting approval in the United States. The U.S. Securities and Exchange Commission (SEC) has yet to make a decision, and recent delays could push that decision until 2024.