©Reuters
Investing.com – The cryptocurrency market got the month of November off to a strong start, with the cryptocurrency hitting $38,000 and surpassing $2,100 on Thursday, amid market optimism about the upcoming launch of ‘Spot ETF, on BTC as well as on ETH.
However, against the prevailing optimism, analysts at JPMorgan (NYSE:) warned earlier this week that the “cryptocurrency rally appears overblown” and that traders would be wise to take profits.
Analysts cited the prospect of a BTC ETF approval in the United States as one of two catalysts for the momentum, but said they did not see an approval bringing a new wave of capital to the cryptocurrency market, contrary to widely accepted belief.
“First, instead of new capital entering the crypto sector to be invested in the newly approved ETFs, we see a more likely scenario as existing capital moving from existing Bitcoin products such as the Grayscale Bitcoin Trust, ETFs Bitcoin futures and publicly traded Bitcoin mining companies, to newly approved spot Bitcoin ETFs,” JPMorgan analysts explained.
They base their conclusions on the fact that spot BTC ETFs have already been listed in Canada and Europe, without causing capital inflows massive enough to influence Bitcoin prices.
The second overstated factor they say they highlighted is the legal victory of and Grayscale in their cases against the SEC, with analysts saying the rulings do little to clarify the long-term regulatory outlook for the crypto industry -currencies in the United States.
“It is far from clear that regulatory tightening of the cryptocurrency industry will ease significantly in the future, given the lack of regulation of this industry,” they said.
“US regulations on the cryptocurrency industry are still pending and we do not believe US lawmakers will change their stance due to the two aforementioned legal cases, especially with memories of the FTX fraud still fresh” they added.
Finally, regarding the “halving” planned for 2024 (halving of rewards for BTC miners, and therefore of the rate of growth of the supply), analysts estimated that this event has already been taken into account and that it will have little effect on the price of BTC once it occurs.
“This argument is unpersuasive, because the halving event and its effects are predictable and, in our view, well priced into the price of bitcoin,” they said.
In conclusion, JPM analysts said they are “cautious on cryptocurrency markets going forward, with a high likelihood of a ‘buy the rumor/sell the fact’ effect following the upcoming SEC approval of the Bitcoin spot ETF”.