The Recent Crypto Selloff Nears an End, Says JPMorgan Chase Report
A recent research report by JPMorgan Chase & Co suggests that the recent selloff in crypto markets is coming to an end. The wave of selling caused by the fading of positive legal and regulatory news appears to be at its end phase, as indicated by the decline in open interest in CME Bitcoin futures contracts. This decline typically signals a weakening price trend. The analysts at JPMorgan predict limited downside for crypto markets in the near term.
Key Points:
- Decline in open interest indicates the end of the selloff
- Limited downside expected for crypto markets in the near term
- Bitcoin has fallen almost 12% in the past two weeks after trading sideways for a month
- Enthusiasm from positive industry developments is fading
- Legal uncertainty and further developments are impacting crypto markets
The recent selloff in crypto markets was influenced by various factors including frothy positioning in tech, higher US real yields, growth concerns about China, and a broader correction in risk assets such as equities. Additionally, the fading enthusiasm from positive industry developments, such as the potential launch of US exchange-traded funds tied to Bitcoin and a favorable court decision for Ripple Labs, has contributed to the decline. The market is now waiting for decisions on spot Bitcoin ETF approvals and an appeal against the court decision on Ripple, creating further legal uncertainty.
Hot Take: Despite the recent selloff, the JPMorgan Chase report suggests that the worst may be over for crypto markets. With the decline in open interest and limited downside expected in the near term, there may be potential for a recovery in the coming months. However, legal uncertainty and further developments remain key factors to monitor.
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