JPMorgan continues to recommend caution in the cryptocurrency market for the foreseeable future due to a number of factors, including a lack of positive indicators and declining retail investor interest.
“There is a lack of positive catalysts, a lack of retail impulse, and the three headwinds previously mentioned in the publication (elevated positioning, high Bitcoin price relative to gold, expected Bitcoin production costs, and suppression of cryptocurrency VC funding). Still, “We remain cautious on the cryptocurrency market in the near term,” JPMorgan analysts led by Nikolaos Panigirtzoglou wrote in a report Thursday.
There has been “significant” selling or profit-taking in the cryptocurrency market over the past two weeks, with retail investors possibly playing a bigger role than institutional investors, according to analysts.
“Indeed, retail investors appear to have sold both crypto and equity assets during April,” analysts said.
They added that not only did spot Bitcoin exchange-traded funds see outflows in April, but indicators of retail interest in the stock, including net inflows into equity funds, also declined over the past month.
“Net inflows into equity funds turned negative in April after strong buying in February and March,” analysts said.
institutional investor
For institutional investors, momentum traders such as commodity trading advisors and quant funds are profiting from previous “extreme buy” positions in both Bitcoin and gold, according to analysts. However, excluding CTAs/quantitative funds, other institutional investors have been reducing their positions less, the analysts concluded.
Last month, JPMorgan analysts warned that Bitcoin prices are likely to fall after the halving because the event has already been priced in. In February, analysts predicted that the price of Bitcoin would fall to $42,000 after the halving, citing reduced miner rewards and increased production costs.
According to The Block’s price page, the current Bitcoin price is around $58,900.
Disclaimer: The Block is an independent media outlet delivering news, research and data. As of November 2023, Foresight Ventures is a majority investor in The Block. Foresight Ventures invests in other companies in the cryptocurrency space. Cryptocurrency exchange Bitget is an anchor LP of Foresight Ventures. The Block continues to operate independently to provide objective, impactful and timely information about the cryptocurrency industry. Below are our current financial disclosures.
© 2023 The Block. All rights reserved. This article is provided for informational purposes only. It is not provided or intended to be used as legal, tax, investment, financial or other advice.