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Cryptocurrency Price Surge Driven by Retail Traders, Not Institutions, Says JPMorgan Analysts

22/02/2024 22:44

According to PANews, JPMorgan analysts, led by Nikolaos Panigirtzoglou, have suggested that the recent surge in cryptocurrency prices appears to be driven by impulsive decisions made by individual traders rather than institutional investors or market fundamentals. In a report published on Thursday, the analysts wrote, "Similar to stocks, we find a rebound in retail impulsiveness in cryptocurrencies in February, which could be the reason for the strong rebound in the cryptocurrency market this month." The analysts stated that retail impulsiveness can be clearly seen by analyzing the cumulative on-chain Bitcoin flow, differentiating between large and small wallets, and adjusting for the inflows of new spot Bitcoin ETFs. They added, "This adjustment is necessary because the Bitcoin held by retail investors has already been transferred to the new spot Bitcoin ETFs, which technically are held by larger institutional wallets, even if the ultimate investors are retail." Another indicator of retail interest in cryptocurrencies can be seen in the growing popularity of artificial intelligence and meme tokens, with their share in the overall crypto market value rebounding in February. The recent retail impulsiveness can be attributed to three main upcoming crypto catalysts: the Bitcoin halving event, Ethereum's next major upgrade, and the prospect of a spot Ethereum ETF being approved in the United States in May. However, the analysts reiterated that the first two catalysts "have largely been digested" and the likelihood of the Ethereum ETF being approved in May is only 50%.

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