According to JPMorgan analysts, the recent rise in cryptocurrency prices is being driven by institutional investors or individual traders making impulsive decisions rather than market fundamentals.
“Similar to stocks, we see individual impulse towards crypto rebounding in February and thus likely responsible for this month's strong crypto market rally,” wrote a team of JPMorgan analysts led by Nikolaos Panigirtzoglou.
Analysts identified retail investor impulse by analyzing cumulative Bitcoin flows on-chain, distinguishing between small and large wallets, and adjusting inflows into new spot Bitcoin ETFs. “This adjustment is necessary because the BTC assets of individual investors shifting to the new spot BTC ETFs are technically held in larger institutional wallets, even if the final investor is an Individual,” they added.
Another indicator of individual investors' interest in crypto is the growing popularity of artificial intelligence tokens and memecoins, according to analysts. According to analysts, the share of these tokens in the overall crypto market cap rebounded in February.
According to analysts, the recent retail investor activity can be attributed to three main upcoming cryptocurrency catalysts: the Bitcoin halving event, the next major update of the Ethereum network called Dencun, and the possibility of spot Ethereum ETFs being approved in the US in May. However, analysts reiterated that the first two catalysts are “largely priced in,” while Ethereum ETFs have only a 50% chance of being approved in May.
*This is not investment advice.
