JPMorgan Crypto Markets to Experience ‘Moderate Downside’ in the Near Future

Crypto News– The cryptocurrency markets underwent a period of correction and liquidations in the current month, yet JPMorgan suggests that the challenging phase may have largely subsided.

JPMorgan Crypto Markets to Experience ‘Moderate Downside’ in the Near Future

Drawing from JPMorgan’s assessment of CME bitcoin futures positions, which serve as an indicator, the process of unwinding long positions seems to be approaching its conclusion rather than being in its initial stages. JPMorgan analysts, led by Nikolaos Panigirtzoglou, conveyed in a recent note, “Consequently, our outlook for crypto markets in the near future indicates constrained downside.“

Cryptocurrency traders had established significant long positions following a series of positive developments — including the XRP legal ruling, the introduction of PayPal’s stablecoin, the anticipation of potential approvals for spot bitcoin exchange-traded funds by the U.S. Securities and Exchange Commission, and preliminary positioning by certain traders ahead of the forthcoming bitcoin halving event.

However, the JPMorgan analysts noted that as the positive news began to wane, the crypto markets corrected. The SEC postponed decisions on spot bitcoin ETF approvals, the agency expressed confidence in appealing the XRP ruling, and discussions in Congress emerged regarding rigorous regulations on stablecoins. “This fading of previously favorable news triggered a series of long position liquidations in recent weeks that still reverberate,” the analysts highlighted. Nonetheless, they added, “The unwinding of these long positions seems to be concluding, not commencing.”

The crypto market correction this month aligned with a broader correction observed across risk assets such as equities and tech stocks. The JPMorgan analysts attributed these corrections to “overexuberant positioning in tech, increased U.S. real yields, and concerns about China’s growth.” Additionally, the analysts mentioned that news about SpaceX liquidating its Bitcoin holdings in both 2020 and 2021 also played a role in catalyzing the correction within the cryptocurrency markets.

At present, Bitcoin, the primary and largest cryptocurrency, is trading at approximately $26,000.