On Monday, the cryptocurrency market experienced its sharpest correction since the FTX crisis, with Bitcoin’s price dropping over 15% before staging a rebound. JPMorgan analysts attribute this recovery primarily to institutional investors, who demonstrated resilience by showing limited or no de-risking in Bitcoin futures, even amidst broader market turmoil.
The bank’s futures position indicator, which monitors cumulative open interest in CME Bitcoin futures contracts, along with the positive slope of the futures curve, signals a bullish sentiment among these investors. The analysts, led by managing director Nikolaos Panigirtzoglou, noted that a higher Bitcoin futures price premium over spot prices reflects confidence from futures investors.
Several factors support this optimism among institutional investors. Last week, Morgan Stanley began allowing its wealth advisors to recommend spot Bitcoin exchange-traded funds to certain clients. Additionally, major liquidations from the Mt. Gox and Genesis bankruptcies appear to be behind us, while expected cash distributions from the FTX bankruptcy later this year could drive further demand in the crypto market. The analysts also highlighted the growing bipartisan support in the U.S. for favorable cryptocurrency regulations. However, they cautioned that these positive factors may already be largely priced in by the market.