JPMorgan: This round of Bitcoin rebound is mainly attributed to institutional investors
According to ChainCatcher, The Block reported that on Monday, the cryptocurrency market experienced its most severe pullback since the FTX crisis, with Bitcoin's price dropping over 15% at one point before rebounding. JPMorgan analysts stated that this rebound was mainly due to institutional investors, who, despite the overall market turbulence, had limited or no de-risking in Bitcoin futures. In a report on Wednesday, JPMorgan's analysts noted that their futures positioning indicator suggests a positive outlook for these investors. They indicated that Bitcoin futures prices are at a higher premium compared to spot prices, indicating strong confidence among futures investors.
Analysts believe there are many reasons for institutional investors to remain optimistic. Last week, Morgan Stanley allowed its wealth advisors to recommend spot Bitcoin exchange-traded funds to certain clients. Additionally, analysts stated that the large-scale liquidations from the bankruptcies of Mt.Gox and Genesis may have already passed, and cash payments from the FTX bankruptcy later this year could stimulate demand in the cryptocurrency market. Furthermore, they added that both major political parties in the U.S. have expressed support for favorable cryptocurrency regulations. However, analysts pointed out that these positive catalysts have largely been priced into the market.
Analysts also noted that the recent significant drop in Bitcoin was not caused by cryptocurrency-specific issues but rather by a pullback in traditional risk assets like stocks. While institutional investors helped support Bitcoin's rebound, retail investors also contributed to Bitcoin's decline. Additionally, momentum traders, such as commodity trading advisors, played a role by exiting long positions and establishing short positions. Overall, despite recent adjustments, JPMorgan analysts remain cautious about the cryptocurrency market. Given that the aforementioned positive catalysts have largely been priced in, and the risk reduction in the CME Bitcoin futures space is limited, coupled with the continued weakness in the stock market, analysts recommend maintaining a cautious outlook.
