JPMorgan Chase: Bitcoin's market capitalization determines the bull and bear markets, and the market will not usher in the next crypto winter

Nikolaos Panigirtzoglou, global market strategist at U.S. banking giant JPMorgan, believes that Bitcoin’s dominance is a trend indicator worth watching for those who want to know when the current bear market phase will end.

During an appearance on CNBC’s “Global Exchange” on Thursday, June 29, Panigirtzoglou spoke about how it would be “healthy” for Bitcoin’s market share to climb above 50%. He believes that this is an indicator to watch when it comes to whether these bear market phases are over.

The high-profile JPMorgan analyst noted that Bitcoin’s dominance “suddenly” dropped from 61% to just 40% in April, in just over a month. Rapidly growing altcoin dominance is often a sign of excessive froth in the cryptocurrency market. The massive rally in Ethereum, Dogecoin and other cryptocurrencies bears resemblance to January 2018, when the market peaked.

After the market-wide crash, Bitcoin’s dominance climbed back up to 48% on May 23, but it has not been able to break through the 50% mark.

Panigirtzoglou pointed out that the amount of funds flowing into Bitcoin has improved recently, but we still haven’t seen the same amount of funds flowing in as in the fourth quarter of 2020, so the overall outflow of funds is still bearish.

One of the highlights of Bitcoin’s recent performance is that Grayscale Bitcoin Trust’s shares are about to be unlocked next month, an event that could exert additional downward pressure on the cryptocurrency market.

Despite this pressure, Panigirtzoglou still expects the market will not usher in another cryptocurrency winter because there will always be a price that will rekindle the interest of institutional investors.