JPMorgan Foresees a Halt in Crypto Downtrend

The recent slump in the cryptocurrency market might be nearing its end, as research from JPMorgan points towards a tapering off of most extended position liquidations.

Analysts from the U.S.-based banking giant, as covered by Bloomberg, believe the liquidation wave is “mostly over.” They base this prognosis on the open interest of Bitcoin futures contracts on the Chicago Mercantile Exchange (CME). Open interest, which denotes active futures contracts, is a key barometer of market sentiment and the robustness of price movements.

A decreasing open interest in Bitcoin signals a potential weakening of its present price trajectory. Analysts infer from this that there’s “minimal downside risk for cryptocurrencies in the imminent future.”

A dip in crypto valuations in the preceding weeks has been attributed to waning confidence stemming from U.S. regulatory moves, as per the report. On August 26, Bitcoin’s trading price hovered around $26,000, marking an 11.27% decline over the last month, as reported by the TradingView chart.

Earlier upbeat events had propelled Bitcoin’s valuation. Noteworthy among these was the introduction of multiple applications for the inaugural U.S. exchange-traded funds (ETFs) pegged to Bitcoin’s spot rate. Prospective entrants in the ETF space awaiting a regulatory nod include industry heavyweights like BlackRock, Fidelity, ARK Invest, and 21Shares.

Additionally, the partial triumph of Ripple Labs against the U.S. Securities and Exchange Commission (SEC) added to the optimism. This buoyancy, however, is seeing a gradual ebb, the report observes, as the market anticipates Bitcoin ETF verdicts and as Ripple’s ongoing tussle with the SEC reintroduces elements of unpredictability.

JPMorgan analysts emphasize that this presents a “fresh bout of legal ambiguity” for the cryptocurrency landscape, making it more reactive to upcoming developments. Outside market dynamics, such as rising U.S. real yields and apprehensions regarding China’s economic momentum, have also impacted the crypto market’s trajectory.