Retail Bitcoin Frenzy: JPMorgan Predicts What’s on the Horizon

Key Points

• JPMorgan’s retail sentiment indicator suggests a frenzy in the Bitcoin market following the US Presidential elections.
• Bitcoin-holder MicroStrategy sees bullish action, with its stock trading at a premium over Bitcoin.

Following the victory of Donald Trump in the US Presidential elections, Bitcoin and other altcoins have seen a significant surge.

However, JPMorgan has indicated that the market is in a state of frenzy and investors should prepare for potential volatility.

Record High Retail Sentiment Score for Bitcoin

JPMorgan’s retail sentiment score for Bitcoin soared to a record high of 4 shortly after Bitcoin’s price reached an all-time high of over $93,000 last week.

This surge was accompanied by strong inflows in US-listed spot Bitcoin ETFs.

JPMorgan’s equity research team noted that the demand for Bitcoin was especially strong following the election results, with the sentiment score for Bitcoin-related products soaring to a multi-sigma high.

In the latter half of the week, the outflows from spot Bitcoin ETFs increased significantly.

This, coupled with high Bitcoin miner selling, resulted in the Bitcoin price dropping to $87,000 before recovering to $90,000 over the weekend.

This indicates a tense battle between the market bulls and bears.

MicroStrategy’s Bullish Action

MicroStrategy, a major Bitcoin holder, has also seen a significant rally, with its stock hitting fresh all-time highs.

The MSTR stock has been trading at a substantial premium over Bitcoin for a while and continues to be in demand due to the company’s aggressive Bitcoin purchases.

The options market linked to MicroStrategy displayed an unprecedented bullish sentiment, reflecting the kind of intense trading typically seen near market peaks.

On Wednesday, the one-year 25-delta put-call skew plummeted to -26.7%, indicating that call options were trading at a significantly higher premium compared to puts.

Although the skew improved to -11.8% by Friday, it still shows a strong bias for upside bets.

Bitcoin calls have been trading at a much higher premium to the puts, but the differential has been slowly narrowing.