JPMorgan Analysts See the Current Bitcoin Downtrend Weakening
- JPMorgan analysts have estimated that the current downtrend in the crypto sector is weakening.
- The analysts noted that most long-position liquidations have been completed and are “largely behind us.”
- They used the data from open interest in BTC futures contracts on the Chicago Mercantile Exchange (CME).
- “We see limited downside for crypto markets over the near term,” the analysts said.
JPMorgan, an American multinational financial services firm based in New York City, has released an analysis claiming that the recent crypto market downturn has slowed down significantly and that most long-position liquidations have been completed. This optimistic analysis proves that the situation might improve in the near future.
As per a report from Bloomberg, analysts at JPMorgan have estimated that the liquidations are “largely behind us.” This comes at a time when the price of the world’s largest cryptocurrency, Bitcoin (BTC), fell significantly due to the regulatory uncertainty in the crypto sector in the United States and the Ripple vs. SEC lawsuit appeal.
JPMorgan analysts have made use of the data from the open interest in Bitcoin (BTC) futures contracts on the Chicago Mercantile Exchange (CME), which confirms that the selling pressure is going down and the downtrend might soon subside. Open interest indicates active futures contracts and serves as an indicator of market sentiment and the strength of price trends.
Interestingly, the JPMorgan analysts stated that Bitcoin’s open interest decline can be seen as a sign that the current downtrend for the leading digital asset might be weakening. “As a result, we see limited downside for crypto markets over the near term,” the analysts said.
It is important to mention here that a few weeks ago, the price of Bitcoin and a few altcoins spiked after payments firm Ripple secured a partial win in a lawsuit against the United States Securities and Exchange Commission (SEC). On the other hand, another factor in the price spike was the world’s largest asset management firm, BlackRock, submitting an application for a Bitcoin spot ETF.
JPMorgan said that the current scenario of regulatory uncertainty and pending Bitcoin spot ETF applications has established a “new round of legal uncertainty” for the crypto sector, which makes it sensitive to future developments. Additionally, the analysts added that external factors like China’s rising growth and the Fed’s interest rate hike also affected the crypto market.
As reported earlier by Bitnation, Umar Farooq, chief executive officer of JPMorgan’s blockchain unit Onyx, asked banks to take measures to protect customers before implementing any experiment in the field of DeFi and blockchain.