Crypto News– JPMorgan analysts suggest that the recent uptick in crypto prices is primarily driven by individual traders acting impulsively, rather than being guided by institutional investors or market fundamentals.
JPMorgan Claims Retail Investors Behind Recent Crypto Rally
In a note penned by JPMorgan analysts, led by Nikolaos Panigirtzoglou, it was stated, “Similar to equities, we find that the retail impulse into crypto rebounded in February, thus likely responsible for this month’s strong crypto market rally.”
The GMCI 30 Index, which tracks the performance of the top 30 cryptocurrencies, has surged over 13% year-to-date.
Retail Frenzy
The analysts highlighted that evidence of retail impulse can be discerned by examining on-chain cumulative bitcoin flows, distinguishing between small and large wallets, and adjusting for inflows into new spot bitcoin exchange-traded funds. They emphasized the necessity of this adjustment because retail investors’ bitcoin holdings that transitioned to the new spot bitcoin ETFs are technically held in larger institutional wallets, even though the end-investor may be retail.
Furthermore, the analysts pointed out another indicator of retail interest in crypto through the increasing popularity of AI and meme tokens. They noted that the share of AI and meme tokens in the overall crypto market cap surged in February, signaling heightened retail participation.
The surge in retail interest in crypto was also observed towards the end of last year, mirroring the momentum witnessed in equities during the fourth quarter of 2023, according to the analysts. They supported this observation by referencing quarterly reports from traditional brokerage firms like Block, PayPal, and Robinhood, which offer crypto trading and custody services to retail customers. These platforms reported increased trading activity and investor flow during the fourth quarter. Similarly, crypto exchanges such as Coinbase also recorded a surge in trading activity among retail investors during that period, as highlighted by the analysts.
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