The latest uptick in cryptocurrency prices is primarily propelled by individual traders’ impulsive decisions rather than institutional investors or market fundamentals, according to insights from JPMorgan analysts.
In a recent note penned by JPMorgan analysts, led by Nikolaos Panigirtzoglou, it was highlighted that the surge in crypto prices during February is predominantly driven by retail investors’ renewed interest in the market.
Analyzing on-chain cumulative bitcoin flows and discerning between small and large wallets, the analysts identified a surge in retail impulse, further substantiating the underlying factor behind the robust crypto market rally observed this month.
Moreover, the rising popularity of AI and meme tokens within the crypto market serves as another indicator of heightened retail interest, as noted by the analysts. The resurgence of these tokens in February underscores the growing participation of individual investors in the crypto space.
Highlighting a parallel with the surge in equities witnessed during the fourth quarter of 2023, the analysts pointed out that retail interest in crypto also experienced a significant uptick towards the end of last year. Quarterly reports from traditional brokerage firms like Block, PayPal, and Robinhood corroborate this trend, revealing increased trading activity and investor inflow into crypto-related services.
Identifying three key catalysts driving recent retail impulse in the crypto market, the analysts pointed to the Bitcoin halving event, the upcoming major upgrade of the Ethereum network known as Dencun, and the potential approval of spot Ethereum ETFs in the U.S. slated for May.
However, the analysts cautioned that the first two catalysts are already “largely priced in,” while the likelihood of approval for Ethereum ETFs in May stands at 50%, emphasising the uncertain nature of future market movements.
