Crypto Market Recovery Ahead? JPMorgan Highlights Buy-The-Dip Moment

Banking behemoth JPMorgan has said that in the face of the ongoing crypto market liquidation across asset classes, a “buy-the-dip” opportunity would soon present itself. From its daily low of around $50,000, Bitcoin (BTC) has seen a dramatic comeback of over 8% rebounding above $54,000 and causing short liquidations in the crypto market.

Bitcoin Recovers, Shorts Liquidated

Bitcoin has rebounded 8% after falling below $50,000 twice in 12 hours. This big reversal saw almost $40 million in Bitcoin short positions sold off in the preceding hour, according to Coinglass. Recent crypto market short liquidations total $57 million.

As the selloff in global stocks intensified Monday, JPMorgan Chase’s trading desk said the rotation out of the technology sector might be “mostly done” and the market is “getting close” to a tactical opportunity to buy the dip https://t.co/Hr6oaXHJ1b

— Bloomberg (@business) August 5, 2024

JPMorgan’s Strategic Prospect

The JPMorgan trading desk observed that the rotation in the tech sector is virtually complete and that the market is very near to providing a “tactical” buy-the-dip opportunity as the selloff in worldwide markets became more pronounced on Monday. Early trading hours saw the Nasdaq drop by 5%, therefore demands for a potential Fed emergency conference gained traction.

Head of positioning Intelligence For JPMorgan John Schlegel said:

“Generally, we believe we are approaching a tactical chance to buy-the-dip; our Tactical Positioning Monitor might dive deeper in the next several days. That said, future macro data will determine whether or not we see a robust rebound.”

HODL pic.twitter.com/qIMam5yFaI

— Michael Saylor (@saylor) August 5, 2024

JPMorgan has also reduced its year-to-date crypto net flow estimate from $12 billion to $8 billion, primarily due to the decrease in Bitcoin reserves across exchanges over the past month. The bank cited factors such as the German government’s sales of seized assets, Gemini creditors, and Mt. Gox.

Prominent crypto players like Michael Saylor of MicroStrategy, who keep their Bitcoin investments despite the current dip, show a degree of trust among important market participants. But the volatility index has soared dramatically to exceed 50 levels, last seen during the COVID-19 pandemic crisis of April 2020.

Analysts warn that, particularly if the Fed’s activities aggravate market volatility, the recovery of the crypto market could not be quick even if there might be chances to purchase.

The present rebound in the cryptocurrency market may be short-lived, according to JPMorgan analysts, who have cast doubt on the durability of the upswing. Fears of a recession have prompted a total outflow of $400 million from the cryptocurrency market, with Bitcoin seeing the largest drop.

The erratic market circumstances call for caution even if JPMorgan’s study and the latest behavior of Bitcoin point to possible purchasing. Future macroeconomic data as well as the activities of central banks such as the Federal Reserve will probably determine the comeback of the crypto market.

Featured image from Pixabay, chart from TradingView