JPMorgan says deleveraging in May and June was the most intense since 2018,
but that’s getting behind the crypto ecosystem amid increased retail demand.

Analysts at the world’s largest bank, JPMorgan, have voiced optimism among retail investors. With a brighter market scenario as a result of significant upheaval and unpredictability.

In a note to clients, a team of strategists led by Mislav Matejka say: “The market is now in a better place.”

“The acute phase of the debt reduction process is behind us and we are seeing some early signs of stabilisation in activity and confidence indicators,” they add.

Cryptocurrency is also enjoying a resurgence in popularity, with Bitcoin and Ethereum both seeing prices increase in recent months.

The note from JPMorgan strategists comes as the US stock market continues to hit new highs. The Dow Jones Industrial Average reached a record high on Tuesday. While the S&P 500 and Nasdaq Composite both closed at fresh all-time highs on Monday.

In the same CoinDesk report. The Bank says that the market’s improvement is due to the declining intensity of the blockbuster deleveraging. That characterized the market downturn in May and June, as well as over the previous several months following the 2021 bull run.

According to JPMorgan experts, “the heated phase of backwardation” seen in the market during the past eight weeks; was the worst since 2018. However, amid the recent sharp crypto price rebounds, the extreme agony period appears to be fading away.

Bitcoin’s price rose above $24,000 for the first time in over a month, with on-chain data from a Glassnode tweet. Suggesting that the quantity of wallets in loss (7-day MA) falls to a 30-day low.

News of the Ethereum “merge” boosts retail demand

The bank notes that while Bitcoin’s upside was tremendous, one of the most encouraging areas was Ethereum (ETH).

After last week’s news that Ethereum’s long-awaited “Merge” will be released to the mainnet in September, investor expectations have risen. The excitement around cryptocurrency’s biggest smart contracts platform caused the price of ETH/USD to rise above $1,500.

The total crypto market cap also crossed above $1 trillion. The quantity of Ethereum addresses in profit (7-day MA) has also hit a one-month high.

The report from JPMorgan notes that “the increase in active addresses is being driven by both new participant inflows. And existing holders moving back into profit” as the price of ETH rallies.

This is a good sign for cryptocurrency, as it shows that people are not only buying ETH for speculative reasons. But because they believe in the long-term potential of the platform.

The bank says that the increase in crypto prices is not reflected in the demand for crypto funds or futures markets. This suggests that retail investors are driving the demand for cryptos.

The increase in the number of “smaller wallets” holding BTC or ETH is further evidence of retail demand, according to JPMorgan.

The bank says that it’s seeing “significant inflows” in exchanges that offer crypto to fiat pairs. Which is another sign that demand is coming from buyers looking to unload fiat for crypto.

The firm also notes that the recent rally has been driven by several factors. Including the roll-out of institutional products, regulatory clarity, and an increase in public awareness.

JPMorgan is one of the biggest banks in the world and has been very critical of cryptocurrency in the past. However, the bank’s report shows that it is beginning to change its tune on crypto as the industry matures.

This is a good sign for the future of cryptocurrency, as more mainstream institutions begin to take it seriously. Cryptocurrency still has a long way to go before it is fully mainstream. But reports like this show that it is slowly but surely getting there.

What do you think about JPMorgan’s report? Let us know in the comments section!

James Atkins

I have been writing copy for blockchain-related projects since 2017. I understand the importance of being able to communicate clearly and effectively with both technical and non-technical audiences. By leveraging my understanding of the crypto industry trends, I can help increase adoption in this rapidly evolving landscape.