Bitcoin (BTC) failed to sustain the recovery driven by NVIDIA amid mixed US employment data and rapidly declining expectations for a Fed interest rate cut.
This caused Bitcoin to fall to $85,700, its lowest level since April.
As the declines continue to deepen day by day, JPMorgan and VanEck analysts also evaluated the recent declines.
Main Drivers of Bitcoin's Recent Decline
In this context, JPMorgan said that the crypto correction continues due to outflows in spot Bitcoin and Ethereum ETFs.
According to The Block, JPMorgan analysts analyzed that the current decline in Bitcoin is caused by the selling of individual investors in spot ETFs.
JPMorgan analysts led by Nikolaos Panigirtzoglou noted that retail investors have sold nearly $4 billion worth of spot Bitcoin and Ethereum ETFs so far in November.
This has been the main driver of the recent cryptocurrency correction.
Bank analysts noted that the large liquidations seen in October have stabilized, but the market correction continues due to retail ETF selling.
“Cryptocurrency investors were responsible for the crypto market correction in October through heavy deleveraging in perpetual futures. However, this previous deleveraging in perpetual futures appears to have stabilized in November.
In the November decline, non-crypto investors, mostly individual investors who used spot Bitcoin and Ethereum, stood out.
Retail ETF investors appear to be largely responsible for the continued correction experienced in the crypto market in November.”
Analysts recently added that a total of $4 billion has flowed from spot BTC and ETH ETFs since the beginning of November, making this the largest outflow since February.
Analysis of Bitcoin's Potential Recovery
Apart from JPMorgan analysts, VanEck analysts also evaluated the decline and said that medium-term investors were leading the BTC sales.
According to VanEck analysts, recent sales were primarily made by mid-term holders, not long-term investors.
Analysts noted that addresses holding BTC over the past five years accounted for most of the recent sales, while long-term holders have largely remained inactive despite deteriorating market sentiment.
VanEck also noted that the BTC balance in wallets that have held BTC for three to five years has fallen by 32% in the last two years, indicating a rotation among investors rather than investor capitulation.
Analysts also noted that open interest in BTC perpetual futures has fallen by 20% since October 9, with funding rates falling to bear market levels.
VanEck consequently predicted that these factors (the HODL strategy of long-term investors, investor rotation, and the capitalization of futures traders) have put BTC in a “reset” state, which could be followed by a recovery.