JPMorgan analyst says weakness in Bitcoin is ‘at its end phase’

Nikolaos Panigirtzoglou is convinced that worst is behind us in Bitcoin.
He agreed that there recently have been positive news in crypto market.
Price of a Bitcoin has declined nearly 17% in less than two months.

A JPMorgan analyst is convinced that the worst is behind us as far as the ongoing decline in the price of a Bitcoin is concerned.

Bitcoin is not the only one taking a hit

Nikolaos Panigirtzoglou attributes recent weakness in the world’s largest cryptocurrency to a bunch of long positions that were liquidated as positive news, including the pending approval of a Spot Bitcoin ETF continued to fade but added:

This unwinding of long positions appears to be at its end phase rather than its beginning. As a result, we see limited downside for crypto markets over the near term.

Note that Bitcoin is not the only risk-on asset that has had a tough few weeks. China-related concerns and higher real yields in the U.S. have been hitting the tech space at large.

Nasdaq Composite is now down about 7.0% versus its recent high.

Why are investors staying on the sidelines?

Panigirtzoglou agrees that there has been positive news in the crypto market including PayPal Holdings introducing its own dollar-pegged stablecoin (read more) and the launch of “Base” by Coinbase Global Inc.

But investors are staying on the sidelines and waiting for regulatory clarity partly because the Securities & Exchange Commission has appealed the recent decision in Ripple’s favour, as per his research note today.

Appeal could result in a trial with outcome not expected until next year, inducing a new round of legal uncertainty for crypto and making them sensitive to any mid-process news.

On Friday, Fed Chair Powell also said at the Jackson Hole symposium that rates may go even higher from here and signalled no near-term intent of cutting rates which doesn’t bode well for the cryptocurrencies either.