The decline in Bitcoin open interest is taken as a sign that the current price trend may be losing steam.
Cryptocurrencies: JP Morgan predicts the end of the market bearish trend
the landscape of cryptocurrencies is experiencing a challenging period in August. The undisputed market leader, the bitcoin (BTC), plummets close to 10%, going from $29,000 to approximately $26,000. This Monday, August 28, the BTC is trading at $26,127.76
This drop has been part of a broader context in which the crypto market as a whole has witnessed a decline d11% in its market capitalization, standing at levels similar to those registered last June. Despite this setback, capitalization continues to hold above trillion dollars. However, there is a sense of optimism on the horizon, as the downtrend could be coming to an end.
JP Morgan spoke about it. Its experts maintain that a large part of the liquidations of long positions have already been executed. Through an analysis of open interest in BTC futures on the Chicago Mercantile Exchange (CME), they suggest that the correction that digital assets have been facing may be reaching its final phase. Open interest, an indicator that reflects the total number of outstanding derivative contracts, such as unsettled futures or options, is a window into market sentiment and the strength of the price trend.
The decrease in open interest in bitcoin it is interpreted as a sign that the current price trend may be running out of steam, say JP Morgan analysts. These analysts express that this could lead to a limited pullback in the crypto markets in the short term.
Bitcoin: JP Morgan projection
JP Morgan insiders they also posit that the recent correction in the crypto markets It could be the result of a “broader correction in risk assets,” which includes both equities and technology. This correction appears to have been triggered by excessive technology positioning, rising real yields in the US and growth concerns in China.
In addition, the strategists stress that this correctionn has slowed down the momentum that had gained strength after the favorable ruling for Ripple in his case against the Securities and Exchange Commission (SEC). In parallel, the news that SpaceX, under the leadership of Elon Musk, has reversed its relationship with bitcoin in the previous quarter, has been an “additional catalyst for the correction in the crypto markets”.
“This news has trapped investors in excessively long positions,” the JP Morgan analysts said.
It is relevant to remember that the SEC is appealing the decision of the district court in the Ripple case, which introduces a new layer of legal uncertainty in the crypto markets until the resolution is known, foreseeably next year.
Source: Ambito
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