Bitcoin's recent price recovery, which followed a sharp correction earlier this week, has been fueled primarily by institutional investors, according to JPMorgan analysts.
Bitcoin is Supported by Institutional Investors, According to JPMorgan Analysts
Despite the significant decline of over 15% on Monday, institutional interest in Bitcoin futures remains strong and minimal risk mitigation is observed.
On Monday, cryptocurrency markets suffered their steepest decline since the FTX crisis, with Bitcoin's price falling more than 15% before rebounding.
JPMorgan analysts, led by managing director Nikolaos Panigirtzoglou, attributed this recovery to continued support from institutional investors.
The published report highlighted that these investors showed limited or no reduction in their Bitcoin futures positions even amid broader market fluctuations.
JPMorgan's futures position indicator and positive futures curve slope, which tracks total open interest in CME Bitcoin futures, indicate bullish sentiment among institutional investors.
Analysts noted that the premium in Bitcoin futures prices over spot prices further underlines this confidence.
There are several factors contributing to this optimism, according to JPMorgan. Last week, Morgan Stanley allowed wealth advisors to recommend spot Bitcoin exchange-traded funds (ETFs) to certain clients.
In addition, Mt. Gox and Genesis bankruptcies are largely behind us, and cash payouts from the FTX bankruptcy are expected to increase demand in the crypto market.
Both major US political parties are signaling support for favorable cryptocurrency regulations, further bolstering institutional confidence.
*This is not investment advice.