JPMorgan: Crypto Market Sell-Off Driven by Retail Investors

May 03, 2024
JPMorgan (JPM) has stated that it maintains a cautious stance on cryptocurrency markets in the short term due to the lack of positive catalysts and the disappearance of retail momentum.
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The bank notes that in April, retail investors sold off cryptocurrency and equity assets, while Bitcoin ETF spot exchange-traded funds faced outflows. This occurred against the backdrop of increased positioning, high BTC prices compared to gold, and restrained venture capital funding.

According to the company’s report, significant profit-taking has been observed in cryptocurrency markets in recent weeks. Retail investors played a major role in the sell-off.

BTC lost 16% in price in April, marking the largest decline since the summer of 2022. Spot Bitcoin ETFs were sold off at the fastest pace on Wednesday, with a net outflow of $563.7M.

Analysts led by Nikolaos Panigirtzoglou noted that institutional investors are impulsive traders, profiting from extremely long positions in BTC and gold.

Nevertheless, futures market analysis suggests a more limited reduction in positions by other institutional investors beyond quantitative funds and CTAs.