Banking giant JPMorgan Chase said that in the face of the ongoing cryptocurrency market liquidation across asset classes, Buy the Dip Opportunity This coin is expected to emerge soon. From its daily low of around $50,000, Bitcoin (BTC) has seen a dramatic 8%+ comeback to surpass $54,000 and cause short liquidations in the cryptocurrency market.
Bitcoin Recovers, Shorts Flood
Bitcoin price rose by 8% After falling below $50,000 twice in the space of 12 hours, the massive reversal saw nearly $40 million in Bitcoin short positions sold in the previous hour, according to Coinglass. The total recent short liquidations in the cryptocurrency market now stand at $57 million.
As the sell-off in global stocks intensified on Monday, JPMorgan Chase’s trading desk said the rotation out of the technology sector may be “mostly over” and the market is “approaching” a tactical opportunity to buy the dip. https://t.co/Hr6oaXHJ1b
— Bloomberg (@business) August 5, 2024
JPMorgan Strategic Outlook
The JPMorgan trading desk noted that the rotation into the tech sector is almost complete and the market is very close to providing a “tactical” opportunity to buy the dip as global markets slumped on Monday. Early trading hours saw the Nasdaq down 5%, and calls for a possible emergency Federal Reserve meeting gained momentum.
John Schlegel, head of JPMorgan’s intelligence division, said:
“Overall, we believe we are approaching a tactical opportunity to buy the dip; our tactical indicator to watch may dive deeper in the coming days. However, future macro data will determine whether we see a strong rebound or not.”
Market sentiment and volatility
Hoddle pic.twitter.com/qIMam5yFaI
— Michael Saylor⚡️ (@saylor) August 5, 2024
JPMorgan also cut its estimate for net cryptocurrency inflows to $8 billion from $12 billion, largely due to a decline in bitcoin reserves across exchanges over the past month. The bank cited factors such as the German government’s sale of seized assets, Gemini’s creditors, and Mt. Gox.
Major crypto players like MicroStrategy’s Michael Saylor, who are holding onto their Bitcoin investments despite the current decline, are showing a degree of confidence among major market participants. But the volatility index has surged to above 50, a level last seen during the COVID-19 pandemic in April 2020.
Analysts warned that if the Fed’s actions exacerbate market volatility, the crypto market’s recovery may not be quick even if there are buying opportunities.
According to JPMorgan analysts, the current recovery in the cryptocurrency market may be short-lived, as they question the sustainability of the rally. Recession fears have led to a total outflow of $400 million from the cryptocurrency market, with Bitcoin seeing the biggest drop.
The volatile market conditions call for caution, even if the JPMorgan Chase study and recent Bitcoin behavior suggest a potential buying spree. Future macroeconomic data as well as the activities of central banks such as the Federal Reserve are likely to determine the return of the cryptocurrency market.
Featured image from Pixabay, chart from TradingView