JPMorgan: High volatility hampers crypto assets' attractiveness to institutions

This article comes fromBloombergBloomberg

Odaily Translator | Nian Yin Si Tang

, original author: Joanna Ossinger

Odaily Translator | Nian Yin Si Tang

Wall Street strategists face a near-impossible task trying to analyze the outlook for bitcoin and other tokens after a rout. And in the process, some see the risk of more trouble down the road.

At JPMorgan Chase & Co., a team led by Nikolaos Panigirtzoglou believes it's too soon to call the bitcoin sell-off over. Meanwhile, Goldman Sachs Group Inc. suggested in a report that extreme volatility is holding back crypto assets’ appeal to institutional investors. And Medley Global Advisors LLC warned that if Bitcoin falls below $20,000, there may be spillover effects.

"It is too early to assert that the recent bitcoin downtrend is over," JPMorgan strategists wrote in a note Friday, citing in part momentum signals and a lack of buying from bitcoin funds and regulated futures. The data.

Bitcoin rallied another 9% to $36,800 on Monday after another weekend of wild volatility. Bitcoin has fallen more than 40 percent from its all-time high in mid-April, a sign of a collapse in the cryptocurrency market and a sign of waning speculative enthusiasm.TwitterThe crypto market has suffered a series of blows in recent days, from Elon Musk's criticism of bitcoin's energy use and Tesla's moratorium on bitcoin payments, to a series of announcements from China to tighten regulation.

Dallas Mavericks owner, billionaire Mark Cuban and other industry leaders also pointed out that some leveraged investors may have to close their positions.

The above refers to this as the "Great Unwind":

"I think this can be called a 'big liquidation'. Traders borrow money to buy ETH, use ETH to borrow altcoins or stablecoins, and then use these to do a high APY trading pair LP, take SLP and look for the highest yield Once the ETH plummets to a certain level, they have to close the position. Unstake, remove liquidity, and pay it back.”

Mathew McDermott, global head of digital assets at Goldman Sachs, also wrote that the firm is looking at crypto-related products such as “funds or structured note-like products.”

In addition to last week's sharp drop in cryptocurrencies (the Bloomberg Galaxy Crypto Index fell nearly 40%, the biggest drop since last March's wide-ranging rout), large intraday price swings have also caught investors' attention.

secondary title

risk-adjusted return

Still, RBC derivatives strategist Amy Wu Silverman noted in a report Sunday that bitcoin is outperforming Tesla Inc's risk-adjusted return, as measured by the Sharpe Ratio. .), the SPDR S&P 500 ETF Trust, or the Invesco QQQ Trust Series 1.