Crypto Sell-Off to End Soon as Bitcoin Stabilises, Says JPMorgan

Key Insights

• According to analysts at JP Morgan, recent data shows that the aggressive selling phase from late last year is finally losing its power.
• Bitcoin ETFs are seeing balanced buy and sell orders, which helps prevent further price drops.
• Analysts believe the market correction occurred because of changes in investor positions, rather than fundamental flaws.

JPMorgan analysts believe that the recent Bitcoin price decline is reaching its end. 

Markets often move in cycles of fear and recovery. Late last year, many investors decided to reduce their risk. This led to a steady drop in digital asset prices. 

However, the bank is now seeing signs that this phase is running out of steam. This does not mean a massive rally is starting immediately. Instead, it shows that the market is finding a floor where prices can stay steady.

Bitcoin Stabilises as Investors Stop Panic Selling

The main reason for the recent price drop was de-risking, as investors felt uneasy about the world economy. 

Because of this, they chose to sell off assets like stocks and crypto to protect their cash and Bitcoin prices fell as a result. However, the underlying technology did not break. 

This is a very important factor for anyone watching the market.

When a sell-off occurs due to fear, it usually ends when everyone who wanted to sell has finished selling. JPMorgan pointed to data from early January to show this is happening. 

The bank tracked how much money flows in and out of the market and found that the heavy selling from December is slowing. Bitcoin itself has stayed around the $90,500 mark recently, and this shows that buyers are stepping in to meet the sellers.

The Bitcoin ETFs And Their Role

Spot ETFs have changed how people trade digital assets because these funds act like a bridge between traditional stock markets and the crypto market. 

When someone buys a share of an ETF, the fund must buy the actual coin. When they sell, the fund sells the coin. This creates a direct link between stock market activity and crypto prices.

During the first few days of the year, these funds saw huge swings. One day even saw nearly $700 million come in, while the next few days saw hundreds of millions go out. 

According to JP Morgan, this back and forth is actually a healthy sign and it means that the market is no longer one-sided. 

In a crash, everyone sells, and no one buys. Right now, both sides are active, and this “two-way flow” helps keep Bitcoin from falling further.

Relief from Global Index Decisions

Another factor helping the market involves MSCI. Earlier, there was concern that MSCI would remove companies that hold crypto from its benchmarks. 

If that had happened, many funds would have been forced to sell their shares, and this could have hurt the market deeply.

However, MSCI decided not to exclude these companies in their February review. This news provided a much-needed sigh of relief. It also removed a major reason for people to sell their positions in a hurry. 

While a future review is still possible, the immediate danger has passed. This has helped Bitcoin maintain its current levels without the threat of a sudden institutional exit.

The Crypto Market’s Performance

According to CoinMarketCap, Bitcoin is currently trading just below the $91,000 price level, with a 0.2% price increase over the last day.

The crypto market is showing signs of stability, just as JP Morgan says | source: CoinMarketCap

Ethereum, on the other hand, is trading underwater, down 0.14% over the same timeframe. However, the asset still trades around the $3,100 zone.

This shows that the market is relatively stable, with small price changes across Bitcoin and the alts.

In all, the next few weeks will determine how January turns out, especially with the final vote on the US CLARITY Act still in view.