TL;DR:
- Bitcoin’s current stabilization near $65,000 does not guarantee an immediate rebound, according to the bank.
- Institutional selling pressure and net outflows from spot ETFs are preventing the formation of a solid base.
- The report highlights that the ecosystem is undergoing a liquidity correction rather than a systemic failure.
Digital asset prices have finally seen a breather that sparked some optimism; however, the investment firm Jefferies does not see a crypto market bottom yet. Although Bitcoin and Ethereum are trading in zones that typically attract buyers, analysts remind us that current macroeconomic conditions are different.
This landscape features a global risk aversion and is marked by institutional de-risking that outweighs short-term valuation signals. Consequently, the sector remains vulnerable to volatility as long as liquidity stays restricted within the technology sectors.
Institutional and Liquidity Factors Hindering Recovery
There are two major obstacles preventing a definitive floor: large-scale investor activity and ETF flows. It will be impossible to establish robust price support as long as net capital outflows and forced liquidation sales persist.
Furthermore, Jefferies points out that over $2 billion in long position liquidations were recently recorded. This dynamic reinforces a “capitulation mode” environment that frightens retail investors, who are unable to offset the selling pressure from large holders.
Notably, the entity does not believe we are facing a total ecosystem collapse; it maintains that this is a correction driven by global liquidity. In their view, blockchain technology fundamentals remain intact, even as valuations must adjust to much tighter financial conditions.
Finally, the strategists’ recommendation is to maintain caution and a minimal exposure in diversified portfolios. The primary focus should be on assets with demonstrable institutional utility, as these will be the first to recover once the appetite for risk returns to the markets.
