JPMorgan: Retail demand improves as the ‘intense phase’ deleveraging fades

JPMorgan claims that deleveraging in May/June was the most intense since 2018. However, this is a good sign for the crypto ecosystem given increased retail demand.

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Analysts at JPMorgan believe that retail investors are optimistic and that there is a positive trend. This optimism comes despite the uncertainty and huge turbulence.

In a report , the banking giant noted that the improvement in the market is due to the decreasing intensity of the massive deleveraging which characterised the crash in May and June as well as the period following the 2021 bull.

Analysts at JPMorgan claim that the “extreme phase of backwardation” seen in the market over two months was the most severe since 2018. The extreme pain seems to be receding amid sharp crypto price jumps in the past few days.

Bitcoin (BTC), which jumped to $24,000, reached its highest level in more than a month. Glassnode on-chain data showed that the number of wallets in losses (7 day moving average) dropped to a low of 30 days.

Retail demand rises in the wake of Ethereum Merge news

The bank stated that while Bitcoin’s upside is remarkable, Ethereum (ETH) was the main avenue to positivity.

Investor expectations are high following last week’s announcement by Ethereum that the long-awaited “Merge”, an update to its mainnet, would be coming in September. As the crypto market caps surpassed $1 trillion, the buying pressure surrounding the announcement of cryptocurrency’s largest smart contract platform, Merge, saw ETH/USD rise above $1,500.

Ethereum’s profit (7-day moving average) also hit a record one-month high.

The bank claims that the rise in crypto prices doesn’t reflect in the futures or crypto funds markets, which is an indication of retail-driven demand.

JPMorgan also added that there is further evidence of retail demand in the rise in “smaller wallets”, which hold BTC and ETH.