This article was compiled by the Ring Finger Research Institute team
Original author: Brian McGleenon
Original article: https://www.theblock.co/post/319798/jpmorgan-analysts-identify-key-catalysts-shaping-cryptos-near-term-outlook
Quick Facts
- Analysts at JPMorgan Chase pointed out that key factors that may affect the cryptocurrency market in the coming months include the seasonal "Uptober" trend, the Federal Reserve's interest rate cuts, and Ethereum's upcoming "Pectra" upgrade.
- Despite the potential offered by historical trends and structural developments, the market remains sensitive to macroeconomic factors and awaits clearer catalysts to drive sustained growth.
Analysts at JPMorgan Chase emphasized that technical, geopolitical and structural events could affect the volatility of the cryptocurrency market in the coming months. In a recent research report, they mentioned that the seasonal "Uptober" trend, the Federal Reserve's interest rate cuts, the approval of Bitcoin exchange-traded fund (ETF) options, and Ethereum's Pectra upgrade are all trends that the market should pay attention to.
October tends to be a bullish month for cryptocurrencies
October tends to be an up month for the cryptocurrency market. One of the key findings of the report is that October has performed strongly in historical trends, commonly known as "Uptober." Analysts mentioned that more than 70% of Bitcoins in October have achieved positive returns.
“While past performance cannot predict the future, the popularity of the concept of ‘Uptober’ may affect market sentiment, leading to positive performance for Bitcoin in October this year,” the analyst explained.
Bitcoin price trend in October over the past decade
(Image source: Bloomberg Finance)
The Fed’s rate-cutting cycle has yet to impact the cryptocurrency market cap
Despite the recent rate cuts by the Federal Reserve, analysts at JPMorgan Chase noted that the overall cryptocurrency market has not yet seen the expected positive impact. Although a falling interest rate environment is generally favorable for risk assets, data shows that the correlation between the overall cryptocurrency market capitalization and the federal funds rate is still weak, at only 0.46.
"Since the Federal Reserve cut interest rates on September 18, we have not seen the expected rebound in cryptocurrency prices. The market may still be waiting for more lasting stability before making a clear directional adjustment," the analyst further explained.
In addition, the analyst added that the lack of historical data due to the late emergence of cryptocurrencies makes it challenging to predict how they will respond to interest rate cycles. "Crypto assets mainly appeared in the early to mid-2010s, and during this period, interest rates were close to zero for most of the time. Therefore, compared with low interest rates, the stability of interest rates may be more beneficial to the crypto market."
Bitcoin ETF options are expected to deepen market liquidity
Another possible catalyst is the recently approved spot Bitcoin ETF options trading. Analysts expect this could deepen liquidity and attract more new participants to the market. "With options, investors can now interact with ETFs in a more flexible way, thereby driving liquidity of the underlying assets," the analyst noted. This development could start a positive feedback loop, improve market structure, and make it easier for institutional investors to enter the digital asset space.
In mid-September, the U.S. Securities and Exchange Commission (SEC) approved options for the BlackRock iShares Bitcoin Trust spot ETF, which is listed and traded on the Nasdaq. However, final approval still requires the consent of the Options Clearing Corporation (OCC) and the Commodity Futures Trading Commission (CFTC).
Pectra upgrade could have long-term impact on Ethereum
The upcoming Ethereum upgrade “Pectra” is another development worth watching. The Pectra upgrade combines the Prague and Electra upgrades and will implement more than 30 Ethereum Improvement Proposals (EIPs) to improve network efficiency, optimize validator operations, and expand account abstraction capabilities.
"Although Pectra will have a profound impact on Ethereum's functionality, we believe that this upgrade is mainly of structural significance rather than a catalyst for short-term price increases," the analysts explained. They believe that the long-term impact of Pectra will improve Ethereum's operational efficiency and popularity, but it is unlikely to trigger a surge in Ether prices in the short term.
Overall, JPMorgan analysts concluded that the cryptocurrency market is currently in a wait-and-see phase, awaiting clearer macroeconomic or structural catalysts to drive sustained growth.
“The crypto ecosystem is becoming increasingly sensitive to macro factors and we are waiting for the next major catalyst to drive development and increase retail participation, thereby bringing long-term growth to the ecosystem,” the analysts concluded.
Summary of the finger snap view
1. "Uptober" trend: JPMorgan Chase pointed out that October is often a bull market month for Bitcoin, and historically more than 70% of Octobers have brought positive returns, which may affect market sentiment. However, past performance does not guarantee the future, and the market is still waiting and watching.
2. Impact of the Fed’s rate cut: Despite the recent rate cut by the Federal Reserve, the crypto market has not yet responded as expected. Analysts believe that the crypto market may need more sustained stability to show the effect of the rate cut.
3. Bitcoin ETF Options: The approval of Bitcoin spot ETF options is believed to be likely to deepen market liquidity, attract more institutional investors into the crypto market, and promote improvements in market structure.
4. Ethereum’s Pectra upgrade: The Pectra upgrade will improve the efficiency and popularity of the Ethereum network, but analysts believe that this upgrade is more of a structural improvement and will have limited impact on prices in the short term.
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【Disclaimer】: The market is risky, and investment should be cautious. This article is for communication and learning only and does not constitute any investment advice. Not Financial Advice, Do Your Own Research.
