Bitrabo Editorial
JPMorgan, a leading bank, foresees a forthcoming opportunity to “buy-the-dip” as the crypto market experiences a sell-off across various asset classes. Bitcoin has shown a notable recovery of over 8% from its low of approximately $50,000, surging above $54,000 and triggering liquidations in short positions.
Bitcoin Bounces Back, Shorts Liquidated
Following two dips below $50,000 within 12 hours, Bitcoin has rebounded by 8%, resulting in the liquidation of almost $40 million worth of Bitcoin short positions in the last hour. Recent short liquidations in the crypto market have totaled $57 million.
JPMorgan’s Analysis
The JPMorgan trading desk suggests that the tech sector rotation is nearing completion, indicating a potential “tactical” buy-the-dip moment amidst the widespread market sell-off observed on Monday. Concerns over a Nasdaq drop of 5% prompted discussions about a possible emergency Fed meeting.
John Schlegel, JPMorgan’s Head of Positioning Intelligence, stated that they are close to a tactical buying opportunity, with future macro data dictating the strength of any rebound.
Market Sentiment and Volatility
JPMorgan has adjusted its year-to-date crypto net flow estimate from $12 billion to $8 billion, attributing it to the decrease in Bitcoin reserves on exchanges due to factors like asset sales by the German government, Gemini creditors, and Mt. Gox. Notably, industry figures like Michael Saylor, maintaining their Bitcoin holdings during market dips, convey confidence among key market players.
The market’s volatility index has surged over 50 levels, reminiscent of the COVID-19 crisis in April 2020. Analysts caution that a swift recovery in the crypto market may be impeded, especially if the Federal Reserve’s actions heighten market volatility.
While JPMorgan’s insights and Bitcoin’s recent behavior signal possible buying opportunities, market unpredictability necessitates a cautious approach. The durability of the market’s current upswing is questioned by JPMorgan analysts, who point to ongoing uncertainty and fears of recession prompting significant outflows from the crypto market.
Future developments in macroeconomics and central bank activities, notably the Federal Reserve, are likely to influence the trajectory of the crypto market’s recovery.
Featured image from Pixabay, chart from TradingView