Crypto News: JPMorgan Analysts Cast Doubt on Crypto Rally

Spot Bitcoin ETF Approval
- Analysts’ Skepticism
- Global Precedents
Legal Cases and Regulatory Uncertainty
- Pending U.S. Regulations
Bitcoin Halving Event
- Already Priced In
- Conclusion
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JPMorgan analysts have voiced skepticism regarding the sustainability of the recent surge in the crypto market, asserting that the “crypto rally looks overdone.”

JPMorgan says 'crypto rally looks overdone'

JPMorgan analysts expressed doubt about the sustainability of the recent crypto market surge, stating that the "crypto rally looks overdone." The analysts identified two major factors that have seemingly led crypto to rally over the… pic.twitter.com/K0L9NYrbBG
— Amdel Trades (@AmdelTrades) November 9, 2023

In a report released on Wednesday, analysts led by Nikolaos Panigirtzoglou highlighted two primary factors they believe have contributed to the recent crypto market rally.

Spot Bitcoin ETF Approval

The prospect of a spot Bitcoin ETF approval in the U.S. was noted as a potential catalyst for the surge. This approval is seen as a means to attract new money into crypto markets and possibly influence a more lenient approach from the Securities and Exchange Commission (SEC) in the future.

Analysts’ Skepticism

However, the analysts expressed doubt about the feasibility of these factors. They contended that rather than fresh capital entering the crypto industry for newly-approved ETFs, a more plausible scenario is the shift of existing capital from products such as the Grayscale Bitcoin trust, Bitcoin futures ETFs, and publicly listed Bitcoin mining companies into the newly-approved spot Bitcoin ETFs.

Global Precedents

Additionally, the analysts pointed out that spot Bitcoin ETFs in Canada and Europe, although already available, have generated minimal interest from investors since their launch, leading to skepticism about the influx of fresh capital into newly approved spot Bitcoin ETFs in the U.S.

Legal Cases and Regulatory Uncertainty

The second major factor influencing the recent crypto rally, according to the analysts, is the SEC’s setbacks in legal cases against Ripple and Grayscale. Despite these legal defeats, the analysts expressed uncertainty about a significant easing of crypto regulations in the future, emphasizing the industry’s current lack of regulation.

Pending U.S. Regulations

They noted that U.S. crypto industry regulations are still pending, and recent legal cases are unlikely to sway the stance of lawmakers, especially considering the lingering impact of the FTX fraud case.

Bitcoin Halving Event

Addressing the optimism surrounding the upcoming Bitcoin halving event in April/May 2024, which is anticipated to reduce the supply of new bitcoins and potentially drive up prices, the JPMorgan analysts dismissed the notion.

Already Priced In

They argued that the halving event is already priced into the market, emphasizing the predictability of its effects on the Bitcoin price.

Conclusion

The analysts highlighted that examining the Bitcoin production cost post-halving, considering current hash rates and difficulty, suggests a rise in production cost from $21,000 to approximately $43,000. However, they asserted that the current price of around $35,000 aligns with an expected 20% drop in hash rates, indicating that the halving event’s impact is already largely reflected in the current Bitcoin price.

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