Crypto’s Current Climb: JPMorgan Suggests Rally May Be Reaching Its Peak
November 09 2023 - 2:00PM
NEWSBTC
JPMorgan analysts have cast a skeptical eye over the recent crypto
rally, indicating it may be built on sand rather than solid ground.
Their latest report conveys a guarded stance, suggesting that the
market’s exuberance may be outpacing the underlying fundamentals.
As the market’s enthusiasm swells, fueled by pivotal developments
such as the US Securities and Exchange Commission’s
(SEC) potential green light of the spot Bitcoin
exchange-traded fund (ETF), these financial experts are urging
caution, advocating a closer examination of the elements at play.
Related Reading: Bitcoin On The Brink? Analyst Predicts Soaring
Open Interest May Signal 20% Price Correction A Closer Look At ETF
Approval And Regulatory Battles Within the crypto sphere, JPMorgan
analysts disclosed that two significant events have captured
investor interest and driven prices upward. These events include
anticipating a US-approved spot Bitcoin ETF, which has ignited
hopes of new capital inflows. At the same time, recent legal
tussles involving the SEC have raised expectations for a more
permissive regulatory environment. However, the JPMorgan team, led
by analyst Nikolaos Panigirtzoglou, presents a contrarian view,
deconstructing these drivers and their probable impact on the
market. They argue that an ETF approval would usher in fresh
capital, which might be misleading. The analysts propose that
rather than attracting new investment; the approval could redirect
existing funds from current Bitcoin investment products into the
new ETFs. The JPMorgan team noted: First, instead of fresh capital
entering the crypto industry to be invested in the newly-approved
ETFs, we see as a more likely scenario existing capital shifting
from existing bitcoin products such as the Grayscale bitcoin trust,
bitcoin futures ETFs and publicly listed bitcoin mining companies,
into the newly-approved spot bitcoin ETFs. This shift, they assert,
would not necessarily expand the market’s capital base. JPMorgan’s
team points to the tepid response to similar products in Canada and
Europe as evidence, suggesting that a US spot Bitcoin ETF might
encounter the same lukewarm reception. Legal victories against the
SEC in high-profile cases like Ripple and Grayscale are also
interpreted as potential precursors to a regulatory softening. Yet,
the analysts remain unconvinced, citing the lingering aftereffects
of the FTX scandal and the inherent risks of an under-regulated
market. They further disclosed that these factors will likely keep
the regulatory tightening trend intact, with little room for
significant easing. Bitcoin Halving: A Pre-Priced Crypto Event? The
report delves into the much-discussed Bitcoin halving, which
traditionally stokes bullish forecasts. However, JPMorgan’s
analysts believe the market has already factored in the halving’s
supply-squeeze implications. They noted: This argument seems
unconvincing as the Bitcoin halving event and its effect are
predictable and in our opinion are well factored into Bitcoin
price. They calculate that based on current data, the production
cost of Bitcoin post-halving should double, particularly from the
current $ $21,000 to $43,000. Their analysis concludes with a
sobering outlook, anticipating a potential “buy the rumor, sell the
fact” scenario post-ETF approval. Such a dynamic could see prices
climb on anticipation and plummet once the event materializes, a
pattern familiar to seasoned market observers. Echoing similar
sentiments, financial commentator Peter Schiff has cast doubt on
the longevity of Bitcoin’s price surges driven by ETF speculations.
Related Reading: Bitcoin’s Grip Strengthens: Record High In
Long-Term Holdings Signals Bullish Horizon Schiff warns that
post-approval, Bitcoin might face a shortage of positive triggers,
potentially culminating in a market sell-off as the ‘buy the rumor,
sell the news’ phenomenon unfolds. How many times can #Bitcoin
rally on the same ETF rumor? Once a U.S. Bitcoin EFT is approved,
or $GBTC is able to convert into an ETF, there will be no more
“good” news for Bitcoin to rally on. After years of buying the
rumor, everyone will finally be able to sell the news. — Peter
Schiff (@PeterSchiff) October 16, 2023 Meanwhile, Bitcoin has seen
quite a significant move in the past few hours. The asset has now
marked a new high for 2023, surging above $37,000, up by nearly 10%
in the past day. Featured image from Unsplash, Chart from
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