JPMorgan Analysts foresee Stable Crypto Market Amid Downturns

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A report from Bloomberg talks about JPMorgan Chase analysts, like Nikolaos Panigirtzoglou, who shared a note. They say that the crypto market will probably calm down soon.

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They think this because the number of people interested in CME Bitcoin futures (like bets on Bitcoin’s future price) is going down. When this happens, it usually means prices might go down.

These analysts believe that the recent drop in the crypto market, where Bitcoin’s price went down about 12% in the last two weeks, is almost done.

Open interest is about the number of futures and options contracts that aren’t settled yet. It’s not the same as trading volume, which is about how many contracts are traded. Open interest shows money going into futures markets, telling us about how strong the market is.

People use open interest to understand the market and guess how trends might change:

1. Trend Confirmation: If open interest goes up with the price, it confirms the price is going up. If open interest goes up but the price goes down, it shows a downward trend.

2. Possible Reversals: If open interest drops with the price, it might mean a downward trend is ending. If the price is going up, but open interest drops, the upward trend might be ending.

3. Price Strength: If open interest is high, big price changes are more likely and can last longer. Low open interest can mean people aren’t confident in the price move, so it might not last.

4. Market Liquidity: More open interest means it’s easier to trade, buying or selling quickly.

5. Volume and Open Interest: Looking at volume and open interest changes together gives more info. For example, big volume with rising open interest means a strong trend, while low volume and rising open interest could mean a change is coming.

6. Supply and Demand Imbalance: Really high open interest might mean things are overbought or oversold, and this could come before a trend changes.

The Bloomberg report also checks what started the selloff. Before, the crypto market felt good because of some things. People liked that the first U.S. exchange-traded funds (ETFs) linked to Bitcoin’s price were getting attention. BlackRock Inc. was leading this. Also, Ripple Labs won a good court ruling in their fight with the Securities and Exchange Commission (SEC).

Crypto Market’s Changes Linked to Legal and Broader Factors

Traders aren’t as excited anymore because they’re waiting for decisions about Bitcoin ETFs. Also, the SEC is going to court about Ripple, making things uncertain legally. This makes the crypto market really sensitive to new things happening.

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The report says that the drop in the crypto market is partly because other risky things, like stocks, are also going down. This is because of a few reasons, like tech companies looking too expensive, higher U.S. interest rates, and worries about China’s economy. Recently, the head of the U.S. central bank, Jerome Powell, said they might raise interest rates more if they need to. This affected risky things too.

JPMorgan’s experts think that most of the selling in the crypto market is done, which means prices might not go down much more for now.

Right now, Bitcoin’s price is around $26,046, and it went up 0.20% in the last 24 hours.

Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.

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