Bitcoin
JPMorgan ‘struggles to find the next catalyst for’ the Bitcoin and cryptocurrency market By 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 headwinds that are currently impacting the cryptocurrency market. The analysis focused on the performance of ETFs, 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 and fresher crypto gains and increased activity, but the first few days of May are not being notably better than April and we struggle to find the next catalyst for the cryptoecosystem,” says one report.
Despite the recent recession in April, JPMorgan sees mixed signs with potential upside as investors return to the market after a brief pause. The report details $218 million in net sales of US spot Bitcoin ETFs in their 80th day of trading, with Fidelity’s FBTC and ARK/21Shares’ ARKB leading the flows.
On the other hand, GBTC has continued to record 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 challenging for crypto markets as total market capitalization declined by 17%, wiping out gains from a strong first quarter. Both Bitcoin and Ethereum saw price drops of 15-20%, with altcoins experiencing even steeper drops. Despite this, stablecoins have shown resilience with a slight increase in market value.
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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 have been seen as positive price catalysts due to the perceived increase in scarcity. However, the immediate impact was mitigated, with Bitcoin prices falling slightly following the halving.
In terms of regulatory developments, the report mentions Hong Kong’s approval of spot Bitcoin and Ethereum ETFs, contrasting with the US Securities and Exchange Commission’s (SEC) hesitation on similar applications. Still, JPMorgan remains cautious as disappointing flows and volumes marked the Hong Kong ETF’s debut.
JPMorgan’s recent report also paints a contrasting picture between Bitcoin and gold in April. Bitcoin suffered a 15% drop, while gold rose 4% to reach new all-time highs. Interestingly, both assets saw their volatility decrease by around 12% last month.
Ethereum also did not fare well, falling behind Bitcoin for the second month in a row with an 18% drop. Its market value shrank to $368 billion in April, although it is still up 34% for the year. Ethereum’s drop was accompanied by a 30% drop in its average daily trading volume.
Meanwhile, the outlook for Ethereum in the US looks bleak, especially with regards to regulatory approval for 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, were a bright spot for the crypto ecosystem, as the largest stablecoins saw their market capitalizations rise to single digits monthly,” the bank added.