Leaked JPMorgan Report Reveals Extreme Bitcoin Price Volatility Warning As Ethereum Crash Adds To $100 Billion Crypto Rout


Bitcoin has swung wildly until 2021, coinciding with the second largest cryptocurrency Ethereum after huge attempts and dashing hopes that increasing acceptance by private investors and institutions would bring stability to the rollercoaster crypto markets.

Bitcoin price is down around 50% from a high in April, which more than doubled in the first three months of the year (subscribe to Forbes’ CryptoAsset & Blockchain Advisor now and beat the market). Ethereum has fallen even further from its May high of well over $ 4,000 per Ether token, a further 5% today and below $ 2,000 amid a cryptocurrency sell-off that wiped around $ 100 billion from the combined crypto market in less than a week Has.

Now, after correctly naming the cryptocurrency crash in May, Wall Street giant JPMorgan has warned of El Salvador’s controversial plan to introduce Bitcoin as legal currency, and of Bitcoin’s low trading volume outside of the major exchanges and its extreme price volatility pointed out as possibly “a significant limitation” on its potential as a medium of exchange. “

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Bitcoin has found new support this year, but it is believed that El Salvador plans to use Bitcoin as a … [+] Legal tender could be hampered by wild fluctuations in the price of Bitcoin. Meanwhile, an Ethereum sell-off has contributed to a $ 100 billion crypto route.

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“Daily payment activity in El Salvador would mean that [around] 4% of recent on-chain transaction volume and more than 1% of the total value of tokens transferred between wallets in the past year, “wrote JPMorgan analysts in a report released last week and viewed by Bloomberg, adding adding a “significant” and increasing proportion [of bitcoin is] held by easy-to-handle purses. “

The report pointed to bitcoin trading volumes that typically exceed $ 50 billion a day but are mostly taking place on large crypto exchanges, with a large portion of bitcoins now locked in illiquid units and 90% of bitcoins no longer than move a year.

The President of El Salvador, Nayib Bukele, announced his plan at the Bitcoin 2021 conference in Miami in early June to establish Bitcoin as legal tender in the country alongside the US dollar. The plan was met with a roar, but it remains detailed even after its rush by the country’s Congress and went into effect with little scrutiny just days later.

Bitcoin proponents, led by Bukele, claim that El Salvador’s formal introduction of Bitcoin in early September will reduce the cost of remittances and encourage financial inclusion among the country’s non-banks.

However, JPMorgan’s researchers see Bitcoin’s high volatility alongside the country’s official dollarization as a major challenge and warn that there is high demand for Bitcoin to US dollar conversions on the government’s Bitcoin spending platform “Onshore Dollars.” – Cannibalize liquidity “.

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Bitcoin price has fallen sharply from its highs of nearly $ 65,000 earlier this year, but it remains in place … [+] well above the price of around $ 10,000 last year.

Coin base

Meanwhile, Bitcoin rival Ethereum is also struggling with staggering volatility as the sell-off, which began in May, drags on.

While Ethereum has experienced a flood of acceptance and attention this year thanks to the double decentralized financing (DeFi) and the non-fungible tokens (NFTs) – both built predominantly on the Ethereum blockchain – the Ethereum price is even wilder than Bitcoin.

But despite the heavy losses in recent weeks, those who have invested in and are working with the technology are confident that they can be successful.

“With Ethereum you are banking on the introduction of a protocol in the area of ​​decentralized finance and intelligent controls,” said JP Theriot, the managing director of the New York-based digital money platform Uphold, in e-mail comments. “The genie is out of the bottle and it’s not going back.”