JPMorgan Reveals Short-Term Downside Risks in the Crypto Market
Recently, financial giant JPMorgan has spoken out, indicating that Bitcoin and the entire crypto market may not be very optimistic in the short term.
In the past few weeks, the crypto market has been like a lost child, unsure of which direction to take, grappling with macroeconomic issues, persistent high inflation, and potential trade wars, all of which have been causing headaches for the market. A new report from JPMorgan has further doused the market with cold water, suggesting that signs of improvement may still be a while away.
JPMorgan analysts pointed out in a report that the crypto market has recently been a bit "soft," mainly because institutional investors are less enthusiastic. They found that the CME's Bitcoin and Ethereum futures markets are nearing a "lagging" state, which means that interest in these digital currencies is waning.
Analysts believe that this situation may put the market under downward pressure in the short term. They also mentioned that from June to July last year, Bitcoin fell from over $70,000 to over $50,000, and history often has a striking resemblance; could this happen again?
So why are institutional investors losing interest? JPMorgan provided two reasons.
First, there isn't much good news in the short term to boost the market, and institutional investors feel that it might be safer to lock in profits rather than take risks. Moreover, it seems that favorable policies regarding cryptocurrencies in the U.S. might not materialize until the first half of the year has passed, which has left investors somewhat disheartened.
Second, the "momentum" of Bitcoin and Ethereum is also waning. Funds that invest based on momentum, such as commodity trading advisors, start to pull back and reduce their investments when they see the momentum shifting. Especially for Ethereum, the momentum signals have already turned negative.
