According to Odaily Planet Daily, the cryptocurrency market suffered its most dramatic correction since the FTX crisis on Monday, with Bitcoin prices falling by more than 15% before rebounding. JPMorgan analysts said the rebound was mainly due to institutional investors, who had limited or no de-risking of Bitcoin futures despite the overall market turmoil. JPMorgan analysts wrote in a report on Wednesday that JPMorgan's futures position indicators indicate a bullish outlook for these investors; last week Morgan Stanley allowed its wealth advisors to recommend spot Bitcoin exchange-traded funds to some clients. And the large-scale liquidations of Mt.Gox and Genesis bankruptcy may be over, while cash payments from FTX bankruptcy later this year may stimulate demand in the cryptocurrency market. They added that both major U.S. political parties have expressed support for favorable cryptocurrency regulation.
Analysts point out that these positive catalysts have been largely factored in by the market. This round of Bitcoin's sharp decline was not caused by cryptocurrency-specific problems, but by the pullback of traditional risk assets such as stocks. While institutional investors helped support Bitcoin's rebound, retail investors also contributed to Bitcoin's decline. Momentum traders such as commodity trading advisors also played a role, exiting long positions and establishing short positions.
Overall, JPMorgan analysts remain cautious on the cryptocurrency market despite the recent correction. Given that the above positive catalysts are largely factored in and there is limited risk reduction in the CME Bitcoin futures space, coupled with continued fragility in the stock market, analysts recommend maintaining a cautious outlook.
