Bitcoin remains stuck in an environment of low liquidity, thin trading volumes and few, if any, catalysts to take it higher. After the recent correction, however, most downside risk is behind us, according to JPMorgan. Late last Thursday, the price of bitcoin dropped as much as 9% , briefly dropping below $26,000, following weeks of sluggishness that were expected to eventually end with upward volatility. Prices have stabilized since but remain around the $26,000 level with few catalysts to move higher. “The fading of … previously positive news has induced a wave of long position liquidations in recent weeks that are still reverberating,” JPMorgan analyst Nikolaos Panigirtzoglou said in a note Thursday. “This unwinding of long positions appears to be at its end phase rather than its beginning. As a result, we see limited downside for crypto markets over the near term.” “An appeal by the SEC could result in a trial with the outcome not expected until next year, inducing a new round of legal uncertainty for crypto markets and making them sensitive to any mid-process news,” he added, referencing the SEC appealing against a district court’s decision in its case against Ripple. Investors have been sitting on the sidelines waiting for a clearer regulatory picture in Washington, but several positive developments in the crypto industry have kept investors upbeat and bitcoin’s price resilient. Panigirtzoglou highlighted the district court decision in the SEC vs. Ripple case, PayPal’s launch of a stablecoin, Coinbase’s new “Base” chain launch and anticipation that the SEC will approve a spot bitcoin exchange-traded fund. “The August correction in crypto markets, which reversed the post SEC vs. Ripple court decision rally can be partly attributed to the broader correction in risk assets such as equities and in particular tech, which in turn appear to have been induced by frothy positioning in tech, higher U.S. real yields and growth concerns about China ,” he said. Bitcoin is down 10% in August but remains higher by more than 57% in 2023. — CNBC’s Michael Bloom contributed reporting.
