JPMorgan Chase has expressed doubts about the sustainability of the recent surge in the cryptocurrency market, saying that “the rally in cryptocurrencies looks overdone.”
Analysts have pointed to two main factors that appear to have contributed to the cryptocurrency’s rise over the past month.
The first is the prospect of a spot Bitcoin ETF being approved in the U.S., which could bring new money to the cryptocurrency market, and such approval has the potential to be seen as a win for the crypto industry and a loss for securities trading.
The second major factor driving the recent cryptocurrency rally is the SEC’s failure in the Ripple and Grayscale legal cases.
But despite these apparent losses, it remains uncertain whether cryptocurrency regulations will be relaxed in the future, JPMorgan analysts said.
“Given the extent to which the cryptocurrency industry is unregulated, it is unclear whether regulatory tightening in the industry will be significantly reduced,” the analysts said. “U.S. cryptocurrency industry regulations are still pending, and we do not believe U.S. lawmakers will do so due to the above two issues.” A legal case may result in a change of stance, especially with memories of the FTX fraud still fresh.”