JPMorgan Strategist: Crypto Correction “Eerily Similar” to 2018

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  • A top JPMorgan strategist has said that the current crypto market is “eerily similar” to the 2018 crash
  • Josh Younger said that the crypto market is clearly in the middle of a “sizeable correction”.
  • He added however that the crypto market is more mature now and can handle drawdowns better

JPMorgan’s Head of Interest-rate Derivatives Strategy has said that the recent crash in the crypto markets is “eerily similar” to the 2018 crash, but has countered concerns by stating that the crypto market is more robust than it was back then. In an investor note yesterday, Josh Younger suggested that the worst may not yet be over for crypto investors following Bitcoin’s drop to $30,000 last week, but the fact that certain market dynamics held up well suggests that there is a greater resilience in the market compared to three years ago.

Crypto Enduring “Sizeable Correction”

Bitcoin’s crash to $30,000 a week ago today was the most brutal collapse since March 2020, and many have predicted that it will usher in a bear market, or at least a lengthy period of consolidation. Younger told investors yesterday that the speed and magnitude of the crash looked “eerily similar” to what the crypto market saw in 2018.

Younger told investors that the move from risky assets like bitcoin to stablecoins, the massively reduced institutional outflows and other negative momentum signals “should caution any view that the worst is clearly behind us”, adding that the crypto market is in the middle of a “sizeable correction.”

Market Strength Should Instil confidence

However, Younger did offer some hope for a swift recovery:

We continue to see evidence of resilient microstructure in cryptocurrency markets: the volatility spike appears somewhat regionally localized, market depth is down but has not cratered despite these moves, and derivatives pricing has managed to adjust quickly enough to retain a decent fraction of the levered long base.

In addition to this, Younger said, the DeFi movement could prove to be the saviour of the space, while continuing institutional interest and the maturation of the crypto market infrastructure could prevent an 85% drawdown as was seen between 2017 and 2020.