Analysts at JPMorgan Chase (JPM) have issued a warning about the current rally in cryptocurrencies, saying that the recent rise in digital asset prices looks “overdone.”
In a new research report, JPMorgan Chase, the world’s biggest bank with assets of more than $3 trillion U.S., acknowledges the big run in crypto prices in recent months, but says that the rally now looks to be overheated.
Excitement about the potential approval of a Bitcoin (BTC) exchange-traded-fund (ETF) has fueled a strong rally in digital asset prices over the last month.
At $37,000 U.S., the price of Bitcoin has risen 38% in the past four weeks and is now up 122% on the year.
However, JPMorgan is skeptical of the view that approval of a Bitcoin ETF will attract billions of dollars worth of new capital, saying that it is more likely that existing capital will shift from current Bitcoin products to the new ETFs.
JPMorgan also notes that cryptocurrency ETFs already exist in Canada and Europe and have attracted “little interest from investors.”
Analysts at JPMorgan also say that they expect regulation to continue to be an issue for the crypto sector going forward given “how unregulated this industry is” right now.
Lastly, JPMorgan says that most bullish tailwinds for the crypto sector are now priced in, and that prices look more likely to fall than rise from current levels.
JPMorgan’s stock has increased 8% this year and currently trades at $146.43 U.S. per share.
