Markets
JPMorgan ‘struggles to find next catalyst for’ Bitcoin and crypto market By Investing.com
JPMorgan maintains a cautious stance on cryptocurrency markets in the near term due to the lack of immediate catalysts for bullish market movements, citing moderate ETF inflows and regulatory challenges.
In a detailed market update, the Wall Street giant identified the headwinds currently affecting the cryptocurrency market. The analysis focused on ETF performance, the implications of the fourth Bitcoin halving, and broader regulatory developments.
“Perhaps these April showers and its poorer month for the cryptoecosystem will bring May flowers, cooler crypto gains, and increased activity, but the first few days of May are not significantly better than April and we “We are struggling to find the next catalyst for the cryptoecosystem,” a report said.
Despite the recent slowdown in April, JPMorgan sees mixed signs with potential gains as investors return to the market after a brief hiatus. The report details US spot Bitcoin ETFs’ net sales of $218 million in their 80th trading day, with Fidelity’s FBTC and ARK/21Shares’ ARKB leading the flows.
Conversely, GBTC has continued to see 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 this week.
April proved to be a tough month for crypto markets as the total market capitalization declined by 17%, erasing the gains of a strong first quarter. Bitcoin and Ethereum both saw a 15-20% price drop, with altcoins seeing even steeper declines. Despite this, stablecoins have shown resilience with a slight increase in market capitalization.
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The JPMorgan report also highlights the effects of the fourth Bitcoin halving, which took place on April 19, reducing daily Bitcoin creation from 900 to 450. Historically, BTC halvings are considered catalysts for positive prices due to the perceived increase in scarcity. However, the immediate impact was muted, with Bitcoin prices declining slightly after being halved.
In terms of regulatory developments, the report mentions Hong Kong’s approval of Bitcoin and Ethereum spot ETFs, contrasting with the US Securities and Exchange Commission’s (SEC) hesitation over similar applications. JPMorgan remains cautious, however, as disappointing flows and volumes marked the debut of ETFs in Hong Kong.
JPMorgan’s recent report also paints a mixed picture between Bitcoin and gold for the month of April. Bitcoin saw a 15% decline, while gold climbed 4% to new all-time highs. Interestingly, both assets saw their volatility decrease by around 12% last month.
Ethereum didn’t fare well either, trailing Bitcoin for the second month in a row with an 18% decline. Its market capitalization fell to $368 billion in April, although it remains up 34% for the year. Ethereum’s decline was accompanied by a 30% drop in its average daily trading volume.
Meanwhile, the outlook for Ethereum in the United States appears bleak, especially regarding regulatory approval of spot ETH ETFs. After some positive discussions with the SEC, insiders are preparing for a 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 saw their market caps increase by a single-digit month,” the bank added.