JPMorgan Sees Limited Downside for Crypto Markets in the Near Term

News that Elon Musk’s SpaceX had written off some of its bitcoin holding in the previous quarter acted as an additional catalyst for the correction in crypto markets in August, the report said.

AccessTimeIconAug 25, 2023 at 8:58 a.m. UTC
Updated Aug 25, 2023 at 3:56 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Analysis of open interest in Chicago Mercantile Exchange’s (CME) bitcoin (BTC) futures shows that the unwinding of long positions appears to be in its end phase rather than its beginning, JPMorgan (JPM) said in a research report on Thursday.

Open interest refers to the total number of outstanding derivative contracts, such as options or futures, that have not been settled.

“As a result we see limited downside for crypto markets over the near term,” analysts led by Nikolaos Panigirtzoglou wrote.

The correction in crypto markets in August, “which reversed the post Securities and Exchange Commission (SEC) versus Ripple court decision rally” can be partly credited to the “broader correction in risk assets such as equities and in particular tech, which in turn appears to have been induced by frothy positioning in tech, higher U.S. real yields and growth concerns about China,” the report said.

JPMorgan said that the news of Elon Musk’s SpaceX writing off its bitcoin holding in the previous quarter acted as an “additional catalyst for the correction in crypto markets.”

“These news caught up investors with an overhang of long positions,” the note said.

The SEC is appealing against the district court’s ruling in the Ripple case and with the outcome of the appeal not expected until next year, this could induce a “new round of legal uncertainty for crypto markets,” the report added.

Edited by Parikshit Mishra.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk offers all employees above a certain salary threshold, including journalists, stock options in the Bullish group as part of their compensation.

Author placeholder image

Will Canny is CoinDesk's finance reporter.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.