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JP Morgan buildings upwards shot
August 11, 2022

JPMorgan: Crypto Has “Found a Floor” Thanks to Expectation of Successful Ethereum Merge

August 11, 2022

According to a note to clients, JPMorgan analysts have said that the cryptocurrency market may have “found a floor”, while Ethereum’s coming upgrade could renew investors’ faith in the crypto markets if all goes as planned.

Ethereum has now shot up over 90% compared to its June low, which JP Morgan attributes to its coming upgrade to Proof-of-Stake.

Overall, the news has catalyzed recoveries throughout the market, which has led analysts to conclude that the worst of the bear market in the crypto market could now be over.

JP Morgan pinpoints crypto bottom

Kenneth Worthington, JP Morgan analyst, advised clients that the market could have “found a floor”  in spite of the drop in trading volume after Terra’s $40 billion collapse. Terra, a failed stablecoin that was pegged to the US dollar sent shockwaves through the market in May when it collapsed.

However, Worthington argues that the impact of Terra (also known by its token name “Luna”) has demonstrated a ‘more limited new contagion’ – one that hasn’t spooked investor appetites the way that analysts may have expected.

There is no doubt that Terra/Luna still caused immense damage. Crypto hedge fund Three Arrows Capital suffered, along with Hashed and several large crypto lenders including Celsius and Voyager Digital. Three Arrows defaulted on several uncollateralized loans after Terra, which resulted in a series of bankruptcies. 

Terra’s fall caused Bitcoin, Ethereum and several other digital assets to lose value, resulting in the global cryptocurrency market’s capitalization dropping below $1 trillion, an event unseen since January 2021. 

Luna token atop black market screen indicating downwards trend
Terra’s implosion impacted investors all over the globe, causing several firms and investors to lose billions of dollars.


Ethereum’s “Merge”

More recently, however, as investor confidence has renewed, many crypto assets made strong recoveries, notably Ethereum. As Ethereum’s “Merge” approaches, which constitutes an important upgrade to its network, the market has been revived.

ETH had dropped below $900 per token on June 18 but currently trades well above $1700. JP Morgan attributes the turning point to the launch of the Sapolia [sic.] testnet in early July and Ropsten testnet in June as a source of investors’ faith in the Merge’s imminent success. 

Goerli, the final testnet prior to the Merge, successfully went live today, leaving just the final stages of the Merge following in mid-September. 

As market and investor sentiment grows stronger, Ethereum’s price rising further is widely anticipated.

As always, this article does not constitute financial advice and you should be sure to do your own research and consult a professional financial advisor before making any investment decision.

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