Analysts: Bitcoin ETFs Showing Signs of Stabilization, Crypto Position Reduction in the Past
Bitcoin ETFs have witnessed a significant outflow of over $1.1 billion in the last three days, raising concerns about the future of the cryptocurrency market. However, analysts at JPMorgan believe that there are positive indications amidst the current turmoil. They have identified “signs of stabilization and bottoming out in bitcoin ETF flows” in January, suggesting a possible end to the recent crypto position reduction by both retail and institutional investors.
Nikolaos Panigirtzoglou, JPMorgan’s managing director of global market strategy, explained in a research note that indicators such as the stabilization of bitcoin ETF flows and crypto indicators in perpetual futures point towards a recovery from the previous sell-off. This optimistic outlook is supported by the recent price movements, with Bitcoin hovering in the $89,343 to $91,360 range over the last 24 hours.
One of the key factors contributing to the current selling pressure in bitcoin ETFs is the uncertainty surrounding external events such as today’s nonfarm payroll numbers and the Supreme Court’s tariff ruling. Nic Puckrin, co-founder of Coin Bureau, highlighted the lack of confidence in the market, evidenced by the sluggish price movements following the early January rally. Puckrin emphasized that the critical price level to watch is around $94,000 for any substantial upward momentum in Bitcoin’s price.
The Supreme Court’s decision on tariffs is also closely watched by analysts, as it could have significant implications for the global economy and financial markets. Dean Chen, an analyst at Bitunix Exchange, believes that the tariff ruling will impact inflation expectations, the US dollar, and overall market sentiment, potentially increasing volatility in Bitcoin and other major cryptocurrencies.
Despite the prevailing uncertainty and market turbulence, JPMorgan analysts refute the popular notion that deteriorating liquidity conditions have precipitated the recent correction in the crypto market. Instead, they attribute the market correction to de-risking triggered by the announcement of MicroStrategy’s exclusion from the MSCI index.
In contrast to some analysts’ pessimistic outlook, CryptoQuant analysts assert that the recent increase in whale buying activity is being misinterpreted, and long-term holdings selling is overstated. They argue that while there has been a significant amount of cryptocurrency spending by long-term holders, a portion of these transactions are internal exchanges, rather than actual selling in the market.
Furthermore, the analysts revealed that large bitcoin investors are not accumulating more coins at the current levels, as their holdings have decreased significantly since early 2023. This trend is reminiscent of the period between 2021-2022 when a similar decline in holdings preceded a bearish cycle in Bitcoin’s price. These findings suggest that the recent market correction may be part of a larger market cycle, rather than a short-term anomaly.
