On Monday, the cryptocurrency markets experienced their most significant correction since the FTX crisis, with Bitcoin’s price plunging over 15% before staging a rebound. JPMorgan analysts attribute this recovery primarily to institutional investors, who demonstrated limited or no de-risking in Bitcoin futures amid the broader market downturn.
JPMorgan’s futures position indicator, which tracks the cumulative open interest in CME Bitcoin futures contracts, along with a positive slope in the futures curve, indicates a bullish sentiment among institutional investors, according to a report by JPMorgan analysts led by managing director Nikolaos Panigirtzoglou. The higher futures price premium over the spot price suggests that these investors remain confident in Bitcoin’s future performance.
Several factors contribute to this institutional optimism, according to the analysts. Recently, Morgan Stanley has permitted its wealth advisors to recommend spot Bitcoin exchange-traded funds (ETFs) to some clients. Additionally, significant liquidations from the Mt. Gox and Genesis bankruptcies appear to be behind us, and forthcoming cash payments from the FTX bankruptcy later this year could further boost demand in the cryptocurrency market. Furthermore, both major U.S. political parties are signaling support for favorable cryptocurrency regulations. However, the analysts noted that these positive developments are largely already priced in.