Markets
JPMorgan ‘struggles to find next catalyst for’ Bitcoin and cryptocurrency market From Investing.com
JPMorgan maintains a cautious stance on cryptocurrency markets in the near term due to a lack of immediate catalysts for bullish market moves, citing subdued ETF inflows and regulatory challenges.
In a detailed market update, the Wall Street giant identified the headwinds currently impacting the cryptocurrency market. The analysis focused on ETF performance, the implications of Bitcoin’s fourth halving and broader regulatory developments.
“Maybe these April showers and its poorest month for the crypto ecosystem will bring May flowers, new crypto gains and increased activity, but the first few days of May are not doing much better than April and we struggle to find the next catalyst for the crypto ecosystem,” reads a report.
Despite the recent dip in April, JPMorgan sees mixed signals with potential upside as investors are piling back into the market after a brief hiatus. The report details $218 million in net sales from U.S. spot Bitcoin ETFs on their 80th trading day, with Fidelity’s FBTC and ARK/21Shares’ ARKB leading the flows.
In contrast, GBTC has continued to experience net redemptions, totaling over -$17.4 billion since its conversion. JPMorgan notes this continued outflow despite GBTC recording a rare day of positive inflows earlier in the week.
April proved to be challenging for cryptocurrency markets as the total market capitalization fell by 17%, erasing gains from a strong first quarter. Both Bitcoin and Ethereum have seen price drops of 15-20%, with altcoins seeing even steeper drops. Despite this, stablecoins have shown resilience with a slight increase in market capitalization.
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JPMorgan’s report also highlights the effects of the fourth Bitcoin halving, which occurred on April 19, which reduced daily Bitcoin creation from 900 to 450. Historically, BTC halvings are seen as positive price catalysts due to the increase perceived scarcity. However, the immediate impact was muted, with Bitcoin prices declining slightly after the halving.
In terms of regulatory developments, the report mentions Hong Kong’s approval of Bitcoin and Ethereum spot ETFs, in contrast to the US Securities and Exchange Commission’s (SEC) hesitation on similar applications. However, JPMorgan remains cautious as disappointing flows and volumes marked the Hong Kong ETF’s debut.
JPMorgan’s recent report also paints a mixed picture between Bitcoin and gold for April. Bitcoin fell 15%, while gold rose 4% to hit new all-time highs. Interestingly, both assets saw their volatility decrease by around 12% last month.
Ethereum also didn’t fare well, falling behind Bitcoin for the second straight month with an 18% decline. Its market capitalization shrank to $368 billion in April, although it is still up 34% year-over-year. Ethereum’s decline was accompanied by a 30% drop in average daily trading volume.
Meanwhile, the outlook for Ethereum in the US looks bleak, especially regarding regulatory approval for ETH spot ETFs. After some positive discussions with the SEC, industry insiders are preparing for the likely rejection of pending ETF applications on May 23.
While there has been some improvement in DeFi activity, the bank notes that “market capitalization and total value locked also declined in April.”
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“Stablecoins, however, have been a bright spot for the crypto ecosystem as the largest stablecoins have seen their market capitalizations increase on a single-digit monthly basis,” the bank added.