The recent volatility that hit the crypto market proved to be both beneficial as well as deterring. Following a major fall, the market bounced back stronger. Major rallies, big gains, and recovery in the market cap were all scheduled for the cryptocurrencies. However, this could likely be the last of it. At least, JP Morgan says so.
Cryptocurrency prices have been connected to a variety of factors. The price of Bitcoin and other assets has correlated with anything from regulations to endorsements. JP Morgan, on the other hand, has begun to link the price of cryptocurrencies to the market capitalization of stablecoins.
As per a recent report, JP Morgan pointed out that the chances of crypto markets witnessing a significant uptrend were rather limited.
The banking giant concluded, based on statistics from a previous report, that when stablecoins accounted for roughly 10% of the global crypto market value, the assets would be on the rise. However, recent research shows that stablecoins entailed a 7% market share in the cryptocurrency industry. Because this was not exorbitant, any future rise would most likely be restricted.
JP Morgan added,
“In other words, the share of stablecoins in the total crypto market cap no longer looks excessive and as a result, we believe that any further upside for crypto markets from here would likely be more limited.”
Did sanctions elevate people’s expectations for crypto?
The Ukraine – Russia war ticked off sanctions of the highest order. Governments across the globe wanted to handicap Russia of its financial power, as a result, heavy sanctions were imposed on the country. Ukraine added to this notion by legalizing crypto after amassing increased funds in digital assets. This further led to people speculating a possible surge in the use of crypto.
Elaborating on the same JP Morgan said,
“These sanctions had raised expectations that cryptocurrencies will be used more extensively in the future to circumvent the traditional banking system given cryptocurrencies are not attached or depend on any government.”
Pouring cold water on this possible association, JP Morgan suggested that the rally was solely dependent on the crypto market. This was mostly, stablecoins.
Even though the latest rally brought immense gains to some, the possibility of not relishing a monumental uptrend was tragic to the community.