Retail Traders Drive Crypto Market Surge in February, JPMorgan Reports

• A JPMorgan report highlighted that retail traders led the February crypto market rally.
• The report factored in inflows into recently approved spot Bitcoin funds.
• Retail traders’ resurgence led by optimism for Bitcoin halving, Ethereum network upgrade, and ETH ETFs.

A new report from JPMorgan has suggested that retail traders have emerged as key players propelling the resurgence of the cryptocurrency market in February. Bloomberg captured details of the analysis from JPMorgan in a recent report.

As per the report, the resurgence of ‘mom-and-pop’ investors in crypto markets following the January crash is the driving force behind the recent surge in popular cryptocurrencies like Bitcoin, reaching multi-year highs.

Specifically, the research team led by Nikolaos Panigirtzoglou, Managing Director of JPMorgan, argued that on-chain Bitcoin flows from small wallets have significantly outpaced those from institutional investors. Besides, the report noted that inflows into recently approved spot Bitcoin funds were factored into the analysis.

This was necessary to prevent large institutional wallets from appearing artificially inflated, as they include funds from retail traders who have recently invested in these new funds. Essentially, the report suggested the observed trend for retail leading the crypto rally holds even after adjusting for inflows into new spot Bitcoin ETFs.

Furthermore, JPMorgan analysts noted that this resurgence is driven by anticipation surrounding three pivotal crypto catalysts in the coming months. This includes the Bitcoin halving event in April, the upcoming Ethereum network upgrade, and the potential approval of spot Ethereum exchange-traded funds (ETFs) in May.

Meanwhile, JPMorgan argued that the first two catalysts are largely factored into the current market dynamics. However, for the third, the analyst estimated only a 50% likelihood of approval for spot Ethereum ETFs. 

The trend of increased retail investment is not isolated to February alone. Reports from payment giants PayPal and Robinhood Markets indicate a notable uptick in net positive Bitcoin customer purchases in the fourth quarter of 2023, marking a stark improvement from previous quarters.