- The recent crypto rally appears overdone according to JPMorgan analysts, who are skeptical about its sustainability
- Factors driving the rally include prospects of a Bitcoin ETF approval in the US and perceived wins for crypto in SEC legal cases
- Reasons for caution include the Bitcoin halving already being priced in and likelihood of a “buy the rumor, sell the fact” effect after ETF approval
Factors Driving the Crypto Rally
Prospects of a Bitcoin ETF Approval
JPMorgan analysts identified the prospect of a spot bitcoin ETF approval in the US as one factor that has seemingly led to the crypto rally over the past month. The idea is that a bitcoin ETF could bring new money into crypto markets. However, the analysts are skeptical that fresh capital will actually enter newly approved spot bitcoin ETFs.
Perceived SEC Defeat
The second main factor is the SEC’s apparent defeats in its Ripple and Grayscale legal cases. Some believe this could lead to more lenient crypto regulations. But the JPMorgan analysts say it’s uncertain if regulations will ease given the unregulated state of the crypto industry.
Reasons for Caution
Bitcoin Halving Already Priced In
Some are optimistic about the upcoming Bitcoin halving event in 2024. But JPMorgan says this event, which reduces bitcoin supply, is already priced into the current bitcoin price.
Likelihood of “Buy the Rumor, Sell the Fact”
Overall, the analysts are cautious on crypto markets going forward. They see a high chance of a “buy the rumor, sell the fact” effect after the expected SEC approval of spot bitcoin ETFs.