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One of the largest and most influential banks in the world, JPMorgan Chase, seems to have quite a conflicted relationship with cryptocurrency. One the one hand, the bank appears to be terrified of crypto’s decentralized nature, which even elicited its CEO Jamie Dimon to call Bitcoin a scam; on the other hand, the banking behemoth does invest in blockchain technology and even started “tokenizing” gold.
But with all of its crypto conflicts, one thing can be determined with certainty: JPMorgan keeps a very close eye on cryptocurrency – and another proof of that has yet again recently popped. JPMorgan’s analysts have noted that the this year’s downward trend in essentially the entire crypto market has been scaring away mainstream institutional investors.
“Participation by financial institutions in Bitcoin trading appears to be fading,” analysts including Nikolaos Panigirtzoglou wrote in a research note dated Dec. 14. “Key flow metrics have downshifted dramatically,” including in futures markets and in average volumes, they said.
The analysts cite data from multiple sources to prove their claim: a decline in interest on Cboe Global Markets (which owns the Chicago Board Options Exchange), data from the Commodity Futures Trading Commission (CFTC), significantly reduced median transaction size according to data from BitInfoCharts.com, and a meaningful drop in crypto mining activity since October 2017 according to data from Blockchain.com. Indeed, those are all compelling indicators signifying that more established financial institutions are distancing themselves from cryptocurrency investments, at least at the moment.
Even without these indicators, though, it shouldn’t come as a surprise that institutional investors are spooked by the passing year’s price movements of cryptocurrencies. Unlike other kinds of investors, institutional ones tend to break away from commodities that are characterized by extremely high and utterly unexpected volatility; these investments pose too great of a risk for such typically huge funds, which traditionally prefer less dicey endeavors.
So perhaps (/probably) what the crypto market needs above all to attract much more big institutional investments is stabilization.