Retail investors appear to have significantly contributed to the recent crypto selloff, which marked the sharpest correction since the FTX collapse, according to the bank.

JPMorgan noted that the positive factors driving Bitcoin and the broader crypto market have already been accounted for. The bank remains cautious about digital assets due to the current positioning in the BTC futures market and ongoing macroeconomic concerns.

JPMorgan has noted that the factors likely to boost the price of Bitcoin (BTC) and the broader cryptocurrency market have largely been accounted for.

Earlier this week, digital assets experienced their largest selloff since the FTX collapse in 2022, with Bitcoin dropping over 15% before a partial recovery. According to the bank's analysts, this decline was primarily driven by retail investors, with momentum traders also contributing by closing long positions and opening shorts.

The market correction followed the Bank of Japan's decision to raise its benchmark interest rate, which strengthened the yen and led to the unwinding of the "carry trade"—a strategy where traders borrow in low-interest yen to invest in higher-yielding assets. Although both traditional and digital asset markets have since stabilized, concerns among traders persist.

JPMorgan analysts have observed that there has been minimal "de-risking" from institutional investors in the Bitcoin futures market, which shows limited open interest and flat movement relative to the spot price spread.

The analysts pointed out that while there are a few positive factors that might maintain institutional interest in Bitcoin and the broader crypto sector—such as Morgan Stanley offering crypto services to its clients, nearing the end of bankruptcy settlements, and favorable regulatory signals from both U.S. political parties—these catalysts appear to be already reflected in current digital asset prices.

The bank remains cautious on the crypto market, noting that despite the recent correction, the CME Bitcoin futures market shows limited de-risking, and equity markets still appear vulnerable. JPMorgan has previously indicated that any short-term rebound in crypto markets is likely to be brief, given that Bitcoin's price remains high relative to its production costs and compared to gold. Currently, JPMorgan estimates the average cost of mining Bitcoin at around $49,000, and prices falling below this level could further pressure miners and negatively impact Bitcoin's value.