A recent research report by JPMorgan Chase & Co. suggests that the recent sell-off in crypto markets is nearing its end. The report, authored by analysts Nikolaos Panigirtzoglou and Joshua Younger, cites a decline in open interest in CME Bitcoin futures contracts as evidence that the unwinding of long positions is nearing completion.
Open interest refers to the total number of outstanding derivative contracts, such as options or futures, that have not been settled. A decline in open interest typically indicates that a price trend is losing strength.
The JPMorgan report also notes that the recent sell-off in crypto markets has been driven by a number of factors, including the Federal Reserve’s interest rate hikes, the ongoing war in Ukraine, and the collapse of the Terra ecosystem. However, the report argues that these factors are unlikely to have a lasting impact on the crypto market.
“We believe that the recent crypto market correction is largely due to macro factors, such as rising interest rates and geopolitical uncertainty,” the report states. “We do not believe that these factors are fundamental to the crypto market and we expect them to have a limited impact on the long-term trajectory of the market.“
The JPMorgan report concludes by saying that the crypto market is likely to stabilize in the near term and that the long-term outlook for the market remains positive.
“We believe that the crypto market is entering a period of consolidation,” the report states. “We expect prices to remain volatile in the near term, but we believe that the long-term outlook for the market remains positive.”
The JPMorgan report is a welcome sign for the crypto community, which has been battered by the recent sell-off. The report’s findings suggest that the worst of the sell-off may be over and that the market is poised for a recovery. However, it is important to note that the crypto market is still highly volatile and that investors should exercise caution.
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