Jefferies: No clear crypto bottom yet; fundamentals point to selective upside
Jefferies says the recent crypto selloff shows little sign of an imminent market bottom, describing the downturn as a liquidity-driven, risk-off correction rather than a failure of blockchain fundamentals. Bitcoin (~$64.8k, ~47% below Oct 2025 peak) and Ether (~$1.9k, ~60% below cycle highs) have fallen sharply amid more than $2 billion in long liquidations. The bank flags selling by large bitcoin holders and persistent spot-ETF net outflows as near-term headwinds, while noting stable network activity, centralized-exchange volumes stabilizing, and selective corporate bitcoin accumulation. Jefferies expects longer-term catalysts—regulatory progress, infrastructure maturity and greater TradFi participation—to drive gains in revenue-linked tokens (tokens tied to blockchains that generate fees/revenue) rather than a broad market rebound. Key implications for traders: continued volatility from liquidity-driven flows and ETF rebalancing; potential divergence where revenue-generating tokens outperform; monitor ETF flows, large-holder selling, on-chain activity and regulatory developments for trade signals.
Neutral
Jefferies frames the downturn as liquidity-driven with intact blockchain fundamentals, which implies limited immediate bullish momentum but also reduces the likelihood of systemic collapse—hence a neutral stance. Near-term bearish pressures include large-holder selling, spot-ETF net outflows and over $2 billion in long liquidations, all of which can prolong volatility and downside. Offsetting factors that prevent a fully bearish classification are steady on-chain activity, stabilizing exchange volumes, selective corporate accumulation of BTC, and potential medium-to-long-term catalysts (regulatory clarity, infrastructure maturity, TradFi adoption). Historically, similar liquidity-led corrections (e.g., post-ETF euphoria selloffs) produced sharp short-term drawdowns followed by sector rotation: quality/revenue-linked assets outperformed while speculative tokens lagged. For traders this means: expect continued volatility and event-driven moves in the short term; favor selective trades in revenue-generating tokens or established large-caps with strong on-chain metrics; use ETF flow data, large-holder wallet activity and regulatory news as primary signals for position sizing and timing.