Market TechFlow news, JPMorgan (JPM) said in a research report on Thursday that analysis of Chicago Mercantile Exchange (CME) Bitcoin (BTC) futures open interest suggests the liquidation of long positions appears to be nearing its end rather than just beginning.
Analysts led by Nikolaos Panigirtzoglou wrote, "Therefore, we believe the downside potential for the cryptocurrency market in the near term is limited."
The cryptocurrency market correction in August "reversed the rebound following the U.S. Securities and Exchange Commission (SEC) court ruling against Ripple," partly due to "broader corrections in risk assets such as equities, especially technology stocks, which in turn were triggered" by frothy valuations in the tech sector, rising U.S. real yields, and concerns about China's growth, the report said.
JPMorgan stated that news of Elon Musk's SpaceX writing down its Bitcoin holdings in the previous quarter acted as an "additional catalyst for the cryptocurrency market correction, putting investors with excessive long positions under pressure."
The report added that the SEC’s appeal of the district court’s ruling in the Ripple case is ongoing, with expected results not likely until next year, potentially triggering "a new round of legal uncertainty in the cryptocurrency market."
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