JPMorgan Sees Crypto Retail Demand Improving, End of 'Intense' Deleveraging Phase

Improved investor sentiment and increased demand ahead of the Ethereum Merge has sparked a market recovery, according to the bank.

AccessTimeIconJul 21, 2022 at 12:00 p.m. UTC
Updated May 11, 2023 at 5:01 p.m. UTC
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Demand among retail investors in the crypto market is improving, and the "intense phase" of deleveraging appears to be over, JPMorgan Chase & Co. (JPM) said in a report on Thursday.

  • "The extreme phase of backwardation seen in May and June, the most extreme since 2018, appears to be behind us," the bank said.
  • Crypto markets have bounced back in recent weeks as investors anticipate the Ethereum "Merge," the blockchain's transition to a proof-of-stake consensus algorithm that is set to commence on Sept. 19.
  • Ethereum network activity has increased alongside an uptick in investor sentiment, JPMorgan said.
  • Bitcoin (BTC) and ethereum (ETH) are up 30.82% and 72.86%, respectively, since diving to lows of $17,600 and $876 in June.
  • The recovery in asset prices is not seen in the crypto fund or futures space, indicating that demand is driven by retail investors, JPMorgan said, before adding that "smaller wallets have seen an increase in ether or bitcoin balances since the end of June at the expense of larger holders."
  • The bank also notes the recovery in staked ether (stETH), a token from the Lido protocol that is supposed to trade at a price close to ether, as an example of how the deleveraging event that ravaged companies such as Three Arrows Capital, Terra and Celsius is now over.
  • Staked ether dropped to a ratio of 0.94 to 1 in June following an unwinding of large quantities triggered by the collapse of Terra.

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Oliver Knight

Oliver Knight is a CoinDesk reporter based between London and Lisbon. He does not own any crypto.


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