Analysts from JPMorgan say that Bitcoin (BTC) currently has “limited downside” following the correction that took the king crypto to the $25,000 level.
In a research report seen by Bloomberg, Nikolaos Panigirtzoglou says that legal and regulatory news caused a wave of selling in recent weeks which is “still reverberating.”
Panigirtzoglou says that the sell-off appears to be at its end phase based on the open interest (OI) on Bitcoin futures contracts on the Chicago Mercantile Exchange (CME). A large amount of OI on futures typically suggests an overly frothy market vulnerable to liquidation cascades, whereas lower OI may suggest that most of the selling pressure has been left in the near term.
“As a result, we see limited downside for crypto markets over the near term.”
The analysts say that market participants are currently waiting for a decision on a spot Bitcoin exchange-traded fund (ETF) and for the U.S. Securities and Exchange Commission (SEC) to appeal the results of its case against payments firm Ripple.
The SEC sued Ripple in late 2020 on allegations that the firm sold XRP as an unregistered security, and received only a partial victory last month.
Anticipation of the SEC’s appeal has induced a “new round of legal uncertainty” for crypto markets and is making them sensitive to further developments.
At time of writing, Bitcoin is trading at $26,001.
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