After undergoing a harsh selloff, the crypto market is gradually getting back on the road to recovery. Strategists from leading American investment bank JP Morgan unveiled this news through a report on June 26. The bank’s team of strategists, which consists of Josh Younger and Veronica Mejia Bustamante, among others, believes the recent stability in Bitcoin (BTC) futures shows that the crypto market is healing.
According to the report, the strategists believe that while the stability shows overall signs of recovery, the crypto market is currently unhealthy. Explaining their skepticism for the crypto market’s performance in the short term, the strategists said the chances are high that there is an overhang of underwater positions, which need to be cleared through the market. To this end, they concluded that while the crypto market shows unhealthy signs, it also seems to have started its healing process.
This news comes after BTC plunged sharply from its all-time high of $64,863.10, losing approximately 48% of its value. At the time of writing, the leading cryptocurrency by market capitalization is changing hands at $ $34,181.04 after gaining 3.09% over the past 24 hours.
BTC might enter into a fresh bear market
Prior to this, Nikolaos Panigirtzoglou, the Managing Director of JP Morgan’s Global Market Strategy, said weak institutional interest in crypto would foster a bear market. At the time, Panigirtzoglou and his team of analysts cited BTC futures, which were trading at a discount to the spot price. According to them, this backwardation was a sign of a bear market. The analysts also pointed out that BTC’s market dominance had slipped from 60% to 40%, claiming this is another sign of a looming bear market.
Reiterating that the decrease of institutional interest in BTC will see the coin slip further, JP Morgan’s analysts predicted that BTC might trade as low as $23,000. In a note on June 24, the analysts said the coin would remain under the $35,000 range in the mid-term. Their prediction was based on the current volatility ratio between BTC and gold.
Apart from this, the analysts believe that investors might decide to sell their shares in the Grayscale Bitcoin Trust (GBTC), following a six-month lock-up period. The fund attracted investments worth nearly $4 billion between December 2020 and January 2021. JP Morgan expects that some investors will sell their GBTC holdings, forcing BTC to shed more value.