JPMorgan Chase: Bitcoin's current rebound is mainly due to institutional investors

Cryptocurrency markets suffered their sharpest correction since the FTX crisis on Monday, with bitcoin prices falling more than 15% before rebounding. JPMorgan analysts said the rebound was mainly due to institutional investors, who have limited or no de-risking of bitcoin futures despite overall market volatility. JPMorgan's futures position indicator shows a bullish outlook for these investors; Morgan Stanley allowed its wealth advisors to recommend spot bitcoin exchange-traded funds to some clients last week, JPMorgan analysts wrote in a report on Wednesday. And the large-scale liquidations of the Mt.Gox and Genesis bankruptcies may be over, while cash payments from the FTX bankruptcy later this year could boost demand in the cryptocurrency market. They added that both major U.S. political parties have expressed support for favorable cryptocurrency regulation. Analysts pointed out that these positive catalysts have been largely factored in by the market. This round of Bitcoin's sharp decline was not caused by cryptocurrency-specific problems, but by a pullback in traditional risk assets such as stocks. While institutional investors helped support Bitcoin's rebound, retail investors also contributed to its decline. Momentum traders such as commodity trading advisors also played a role, exiting long positions and establishing short positions. Overall, despite the recent correction, JPMorgan analysts remain cautious about the cryptocurrency market. Given that the above positive catalysts are largely factored in and there is limited risk reduction in the CME Bitcoin futures space, coupled with continued fragility in the stock market, analysts recommend maintaining a cautious outlook. (The Block)