In a recent report, Wall Street giant JPMorgan (JPM) has reiterated its cautious stance on cryptocurrency markets in the near term. The bank highlighted a lack of positive catalysts and the disappearing retail impulse as reasons for its cautious outlook.

According to JPMorgan, retail investors have been taking profits in recent weeks, contributing to significant profit-taking in the cryptocurrency markets. Notably, retail investors have played a larger role in the sell-off compared to institutional investors. In April, Bitcoin experienced its biggest monthly decline since June 2022, falling 16%.

The outflows were not limited to cryptocurrencies alone, as retail investors also sold equity assets. Spot Bitcoin exchange-traded funds (ETFs) saw outflows, with U.S.-based ETFs experiencing the largest cumulative net outflow of $563.7 million on a single day. This represented the fastest pace of outflows since the ETFs started trading on Jan. 11.

JPMorgan identified three headwinds that continue to challenge the cryptocurrency markets. These include the elevated positioning, high Bitcoin prices compared to gold and the estimated production cost, as well as subdued crypto venture capital funding.

While the bank pointed out that institutional investors, particularly momentum traders such as commodity trading advisors (CTAs) and quantitative funds, have taken profits on previous extreme long positions in Bitcoin and gold, other institutional investors have shown a more limited reduction in their positions.

Despite the cautious outlook, JPMorgan's analysis of the futures market suggests that there may be some institutional investors outside of quantitative funds and CTAs who have not significantly reduced their positions.

It is important to note that JPMorgan's analysis of the cryptocurrency markets is in line with its cautious approach and does not indicate a shift in sentiment towards cryptocurrencies in the long term.

CoinDesk, an award-winning media outlet covering the cryptocurrency industry, provided this analysis. Its journalists uphold a strict set of editorial policies and operate independently as a subsidiary under an editorial committee.

JPMorgan's cautious stance on cryptocurrency markets reflects the ongoing challenges faced by the sector. As retail investors continue to take profits and headwinds persist, the future direction of the cryptocurrency markets remains uncertain.

Note: The article is based on information provided by JPMorgan and CoinDesk. It does not offer financial advice or opinions.