Cryptocurrency Market More Resilient Now Compared to 2017/2018: JPM Analyst

Cryptocurrency Market More Resilient Now Compared to 2017/2018: JPM Analyst

After comparing the most recent violent crash with the same developments in 2018, a senior strategist from JPMorgan Chase & Co concluded that the state of the market now is significantly more resilient and robust than three years ago.

2021 vs. 2018 Market Corrections

What started by Elon Musk and Tesla a few weeks ago and received support from China and its negative stance on the crypto space became the most violent correction in the market in terms of USD declines.

In a matter of days, bitcoin slumped from $50,000 to a low of $30,000 and most altcoins nosedived even more. Although the aforementioned two reasons could be regarded as the crash’s initiation, the situation worsened when the over-leveraged traders started to see their positions liquidated.

These adverse developments left the door open for many experts to speculate on the state of the market now, and the latest to do so was JPM’s head of interest-rate derivatives strategy – Josh Younger. Cited by Bloomberg, the analyst outlined the similarities of this market dump and what transpired in early 2018, which actually turned out to be the start of a year-long bear market.

2018 vs. 2020 Market Correction Comparisons. Source: Bloomberg
2018 vs. 2020 Market Correction Comparisons. Source: Bloomberg

Nevertheless, Younger outlined a few significant differences as well, including the market volatility, which primarily came from North American this time.

Crypto Market More Resilient in 2021

The second, and perhaps even more notable reason Younger highlighted, was the state of the market following the crash. He noted that the cryptocurrency space had reacted quite well to the 50% dumps with fast recoveries across all charts.

“We continue to see evidence of resilient microstructure in cryptocurrency markets: the volatility spike appears somewhat regionally localized, market depth is down but has not cratered despite these moves, and derivatives pricing has managed to adjust quickly enough to retain a decent fraction of the leveraged long base.”

The senior strategist concluded that all of the above has argued “against the view that we are in the midst self-reinforcing vicious cycle of price declines – a classic run scenario.”

The crypto community has asserted many times in the past that the 2020/2021 bull run is quite different from the cycle three years ago. The market is more mature now, and the entrance of institutions, banks, and large corporations proves this narrative.

editorial staff

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