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JPMorgan analysts have highlighted several critical factors that could shape the cryptocurrency market in the coming months, noting technical, geopolitical, and structural events that are likely to drive price movements.
JPMorgan Analysts Discuss Factors That Will Determine the Price of Bitcoin and Cryptocurrencies
In a research report published today, the impact of the seasonal “Uptober” trend, Fed rate cuts, Bitcoin ETF options approval, and Ethereum’s upcoming Pectra upgrade were discussed.
One of the main takeaways from the report is the historical trend of strong October performance, commonly known as “Uptober.” Analysts noted that over 70% of all Octobers resulted in positive returns for bitcoin.
“While prior performance is not a predictor of future performance, we think this popularization of ‘Uptober’ could influence behavior and result in a positive month for bitcoin this October,” the analysts wrote.
Despite the Fed’s recent rate cuts, analysts noted that the broader cryptocurrency market has yet to experience the expected positive impact. Typically, a falling interest rate environment supports risk assets, but the correlation between total crypto market cap and the federal interest rate remains weak at 0.46, the report said.
“We have not yet seen the expected ‘explosion’ in cryptocurrency prices since the Fed’s interest rate cut on September 18,” analysts said, suggesting that the market may be waiting for more stability before making decisive moves.
The analysts also acknowledged the lack of historical data, which makes it difficult to predict how cryptocurrencies respond to interest rate cycles. “Crypto assets really only emerged in the early to mid-2010s, and interest rates have been near zero for most of their existence. It’s possible that stable interest rates, rather than low interest rates, would benefit these markets the most,” they wrote.
Another potential catalyst identified by analysts was the recent approval of options trading on spot bitcoin ETFs. They believe this development could deepen market liquidity and attract new participants. “With options, investors now have a more dynamic way to interact with the ETF and increase liquidity in the underlying asset,” they noted. This could create a positive feedback loop, improving market structure and making digital assets more accessible to institutional investors.
In mid-September, the U.S. Securities and Exchange Commission (SEC) approved BlackRock’s iShares Bitcoin Trust spot ETF to list on Nasdaq and offer options trading, although final approval is still up to the Options Clearing Corporation (OCC) and the Commodity Futures Trading Commission (CFTC).
The report also highlighted Ethereum’s upcoming “Pectra” update as a significant development. Combining the Prague and Electra updates, Pectra will implement over 30 Ethereum Improvement Proposals (EIPs) aimed at improving network efficiency, validator transactions, and account abstraction.
“While Pectra is expected to be transformational for Ethereum’s functionality, we view this upgrade as more of a structural than an immediate price catalyst,” the analysts wrote. They predict that Pectra’s long-term impact will increase Ethereum’s operational efficiency and adoption, but they believe it is unlikely to trigger a short-term increase in ETH price.
JPMorgan analysts concluded that the cryptocurrency market is in a holding pattern, awaiting a clear macroeconomic or structural catalyst for sustained growth. “We continue to see the crypto ecosystem increasingly sensitive to macro factors, so we await the next major catalyst for development and enhanced retail participation to drive secular growth for the ecosystem,” they said.
*This is not investment advice.