JPMorgan Chase, the financial titan, has voiced a measured outlook on Bitcoin (BTC) and the broader cryptocurrency market, suggesting that most of the catalysts capable of driving prices higher are likely already factored in. This assessment follows the market’s most significant downturn since the 2022 FTX collapse, a selloff predominantly influenced by contagion in traditional financial markets. Bitcoin itself experienced a sharp decline of over 15% before staging a partial recovery, according to the bank’s analysts.

The recent crypto market turbulence was primarily driven by retail investors, with momentum traders further exacerbating the downturn by unwinding long positions and initiating short sales. The rapid correction was triggered by the Bank of Japan’s decision to hike its benchmark interest rate last week, which resulted in a stronger yen and the unwinding of the “carry trade” strategy—where traders borrowed yen at low-interest rates to speculate in higher-yielding assets. Despite subsequent stabilization in both traditional and digital asset markets, trader sentiment remains fraught with apprehension.

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Interestingly, institutional investors have shown little to no “de-risking” behavior in the Bitcoin futures market. The analysts noted that open interest has remained limited, with spot price spreads showing sideways movement, indicating a lack of enthusiasm from this investor class.

JPMorgan’s analysts pointed out a handful of factors that might sustain institutional interest in Bitcoin and the broader crypto sector. These include Morgan Stanley wealth advisors beginning to offer crypto assets to their clientele, the nearing conclusion of bankruptcy payouts, and indications from both major U.S. political parties of favorable regulatory developments. However, the bank also suggested that these positive drivers seem to have been largely absorbed into the current valuations of digital assets.

“With limited de-risking observed in the CME Bitcoin futures space and the vulnerability still present in equity markets, we maintain a cautious stance on the cryptocurrency market, even in light of the recent correction,” JPMorgan’s report stated.

This cautious tone from JPMorgan is not without precedent. The bank has consistently argued that any near-term rebound in the crypto markets is likely to be ephemeral, as Bitcoin’s price remains elevated relative to its production cost and in comparison to gold. The analysts currently estimate that the average cost of mining Bitcoin hovers around $49,000, implying that any price movement below this threshold would exert additional pressure on miners, potentially dragging down BTC prices further.