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In a note to clients on Monday, JPMorgan analyst Ken Worthington said May was a challenging month for cryptomarkets, and the ecosystem is in need of a fresh catalyst.
The analyst wrote that the already difficult April environment was “exacerbated in May by the collapse of the UST algorithmic stablecoin that drove a combination of forced selling and uncertainty to negatively impact the broader cryptoecosystem.”
“While trading volume appears somewhat higher in May from a depressed April, nearly all the other gauges of growth declined this past month,” he added.
Although volume somewhat recovered, up 17% from depressed April levels, volume is still well below (35% below) more robust 4Q21 levels and below more tepid volume levels in 1Q22, said the analyst.
Worthington added that they remain fans of crypto- technology, but they “continue to believe the cryptoecosystem is in need of a fresh catalyst,” with the Ethereum merge a potential positive catalyst for the market.
The merge is an upgrade to Ethereum, which will see it merge with the beacon chain proof-of-stake system, ending the proof-of-work for Ethereum and transitioning to proof-of-stake.
