The cryptocurrency industry has soared since February due to the resurgence of interest from common investors in favorite cryptos, for instance, Bitcoin and Ether. JPMorgan Chase & Co. strategists revealed that the Bitcoin on-chain flows from small wallets have surpassed those by institutional investors after subtracting the inflows into new spot Bitcoin exchange-traded funds (ETFs). Bloomberg reported recent findings from JPMorgan’s analysis.
Strategists, led by Nikolaos Panigirtzoglou, wrote that the renaissance of retail impulse in February could be explained by the expected three significant factors: the Bitcoin halving event, the next major upgrade of the Ethereum network, and possible approval by the US SEC of spot Ethereum ETFs in May.
The Bitcoin halving, which is expected to be in May 2024, will reduce the production of new bitcoins from the network by half, therefore creating scarcity that may push up the price of this digital asset. The next major update on the Ethereum network, called Ethereum 2.0, will introduce a new consensus mechanism, making it more scalable and secure and using less energy.
The SEC approving Ethereum’s spot ETFs would enable investors to get into the second largest cryptocurrency based on market capitalization without worry about technical difficulties associated with purchasing or storing it. According to them, the first two catalysts are largely priced in, while they give a 50% probability to the third one.
Retail Surge Signals Crypto Momentum
According to a report, a February surge in retail interest in cryptocurrencies is part of a broader fourth-quarter 2023 pattern. Block Inc., PayPal Holdings Inc., and Robinhood Markets Inc. have been quoted by strategists, referring to the most recent reports where there was observed net positive Bitcoin buying by customers during the last quarter of 2023 as compared to net negative sales in the preceding quarter.
The report also remarked that Coinbase Global Inc.’s largest US-based cryptocurrency exchange earnings exhibited the maximum quarterly Bitcoin trading volume over two years. Another indication of expanding retail interest in crypto markets is the advent of AI and meme tokens, usually fancied by public traders for their newness and chances to get good returns.
The report concluded that the retail impulse in the crypto market is likely to continue in the near future, as more investors seek to benefit from the opportunities and innovations offered by the emerging asset class.
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