Crypto Market Surge May Not Last: JPMorgan Analysts Say
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In the past month, the crypto market has seen a bullish surge, with Bitcoin breaking local records above $37,000. However, analysts from JPMorgan expressed skepticism about the sustainability of this rally, pointing to potential factors that could hinder the market’s upward trajectory.
Cryptocurrency enthusiasts have been riding the wave of optimism fueled by the anticipation of a spot Bitcoin ETF approval in the U.S. and perceived regulatory victories in cases involving Ripple and Grayscale. However, JPMorgan analysts raise doubts about the impact of these events on the crypto market, according to The Block.
Reasons Why the Crypto Market Is Overbought: JPMorgan
The first factor under scrutiny is the belief that a spot Bitcoin ETF approval would infuse fresh capital into the industry. Contrary to this, analysts argue that it might merely shift existing capital from other Bitcoin products. They point out that similar ETFs already exist in Canada and Europe with minimal investor interest.
Secondly, the regulatory landscape remains uncertain, despite recent setbacks for the SEC in the Ripple and Grayscale cases. Analysts caution against interpreting these outcomes as indicative of a more lenient approach in the future. They emphasize that the crypto industry’s lack of regulation persists, and a shift in the stance of U.S. lawmakers is unlikely based solely on legal precedents.
While some hold high hopes for the upcoming Bitcoin halving event in April or May 2024, JPMorgan analysts assert that the market has already priced in the potential benefits. They argue that the current price reflects an anticipated drop in hash rate as less efficient miners exit the market.
Finally, analysts from JPMorgan adopt a cautious stance on the crypto market’s future, foreseeing a possible “buy the rumor/sell the fact” effect after an SEC approval of spot Bitcoin ETFs. As the market continues to evolve, investors are urged to navigate these developments with vigilance.
