Wall Street giant JPMorgan (JPM) pointed out in its recent report that the recent decline in the cryptocurrency market has been primarily driven by retail investors, as the current market lacks positive catalysts.
The analyst team led by Nikolaos Panigirtzoglou stated in the report that retail investors sold both cryptocurrencies and stocks in April, and the trend of capital outflow from Bitcoin spot ETF was also observed. According to data from Sosovalue, Bitcoin ETF outflows have become increasingly frequent, with even the previously never-recorded outflows of the BlackRock Bitcoin ETF recording around $37 million yesterday, leading to the highest ever outflow record for Bitcoin spot ETF (5.637 billion USD).
In the current market environment, JPMorgan identified three major unfavorable factors, namely high positions, Bitcoin’s relative position to gold and high Bitcoin production costs, and the subdued venture capital (VC) market for cryptocurrencies.
The report pointed out that significant profit-taking has occurred in the cryptocurrency market in recent weeks, with retail investors playing a larger role in the sell-off than institutional investors. Bitcoin fell by 16% in April, marking the largest monthly decline since June 2022.
As for institutional investors, the report stated:
However, despite the reduction in holdings by quant funds and CTAs in the market, JPMorgan’s analysis of the futures market shows that other types of institutional investors have relatively smaller reductions in their holdings. This indicates that traditional institutional investors such as pension funds and insurance companies, apart from quant funds and CTAs that rely on mathematical and computer models for decision-making, have not significantly reduced their holdings of Bitcoin or other investments.
However, the analysis of the futures market suggests that “positions of other institutional investors (excluding quant funds and CTAs) have decreased to a limited extent,” the author wrote.
