JPMorgan Warns About Bitcoin and Cryptocurrencies: "In the Near Term..."

JPMorgan analysts warned that Bitcoin and the overall cryptocurrency market could come under pressure in the near term.

Earlier this week, despite the initial surge following President Donald Trump's social media update regarding Bitcoin reserves, which have been widely discussed as a 'strategic crypto reserve,' gains quickly reversed due to broader concerns in the market related to customs tariffs.

JPMorgan's Nikolaos Panigirtzoglou expressed skepticism after further analysis of the strategic crypto reserve in a note. He said, “There is skepticism not only about congressional approval for such a strategic crypto reserve, but also about the feasibility of including smaller tokens other than Bitcoin and Ethereum, considering the higher risks and volatilities.”

Panigirtzoglou also pointed out that Bitcoin reserves failed to attract interest at the state level. Proposals for acceptance were rejected in Montana, North Dakota, South Dakota, and Wyoming due to concerns about risk and volatility. In addition, central banks in Switzerland and Poland further reduced institutional sensitivity by rejecting the idea of including Bitcoin reserves.

Another factor that influences the price of Bitcoin is the absence of a significant catalyst specific to crypto. Panigirtzoglou said, "Institutional investors also seem to be reducing their positions due to the lack of positive catalysts and the disruption of momentum." He also added that futures position indicators for Bitcoin and Ethereum, based on changes in open positions in CME futures contracts of JPMorgan, indicate that there is room for further relaxation as momentum traders start to build short positions.

Signs of weakening demand are also reflected in recent capital raises by major players in the sector. Strategy, formerly known as MicroStrategy, issued $2 billion in convertible debt, while Bitcoin miners like Mara Holdings raised significant capital through stock and debt offerings. However, Panigirtzoglou noted that the terms of these deals have become increasingly investor-friendly last month, pointing to growing caution and selectivity among investors.