According to The Block, analysts at JPMorgan are cautious about the recent surge in the cryptocurrency market, as they believe the momentum of cryptocurrencies seems to be a bit overdone.
In the past month, the anticipated approval of a potential Bitcoin spot ETF in the United States has driven the surge in the cryptocurrency market. Analysts wrote in their report that the market widely believes that besides bringing new funds to the market, it is also an important battle between the cryptocurrency industry and the U.S. Securities and Exchange Commission (SEC). In recent months, the SEC has suffered consecutive defeats in lawsuits involving Ripple and Grayscale. If the Bitcoin spot ETF is approved, it will be another victory for the industry, leading to a more relaxed regulatory environment in the future.
However, JPMorgan analysts are skeptical about these two factors or arguments. The analysts wrote:
Moreover, the analysts also pointed out that Bitcoin spot ETF products already exist in Canada and Europe, but have not attracted investors since their launch. Therefore, they question whether the newly approved Bitcoin spot ETF can really attract new funds in the United States.
Regarding regulatory positives, JPMorgan analysts believe that despite the recent consecutive failures of SEC enforcement actions, it is still uncertain whether this will lead to a relaxation of future regulations on cryptocurrencies.
The upcoming Bitcoin halving in April to May next year is also one of the factors that investors are optimistic about the future. However, according to JPMorgan analysts, since the Bitcoin halving event and its impact are predictable, the current halving event has already been priced into the market.
Overall, analysts are cautious about the future direction of the cryptocurrency market, with a high possibility of a “buy the rumor/sell the fact” scenario, especially when the “SEC approves a Bitcoin spot ETF” actually happens.