Jefferies: "Bitcoin has bottomed?… Still too early to call"

Global investment bank Jefferies suggested that further downside risk remains open in the digital-asset market.

According to CoinDesk, a digital-asset-focused outlet, on the 6th (Korea time), Jefferies said in a report that "(in relation to the recent sharp sell-off in the digital-asset market) there are still no clear signs of a bottom."

More specifically, Jefferies described the latest decline as a "risk-off correction driven by tightening liquidity rather than a collapse in blockchain activity," adding that "network usage remains resilient and some companies continue to accumulate bitcoin." It added that "this downturn is the result of a confluence of risk-asset aversion across global financial markets and outflows from growth stocks."

As grounds for expecting additional declines, it pointed to selling by bitcoin holders and continued outflows from spot exchange-traded funds (ETFs). Jefferies said, "selling pressure from short-term holders has been increasing during the recent price decline," and added that "outflows from spot ETFs are continuing, which could weigh on the market."

Still, Jefferies assessed that the blockchain fundamentals of bitcoin and ether (ETH) have not broken down. The report said, "over the medium to long term, an improved regulatory environment, maturing infrastructure, and broader participation from traditional finance (TradFi) could drive a selective rebound in the token market," adding that "in particular, blockchain-based tokens linked to tangible revenue such as transaction fees could have greater upside over time."