Jefferies: No Clear Crypto Market Bottom — Short-Term Recovery Unlikely
Jefferies’ research finds no clear cryptocurrency market bottom as of early 2025. The investment bank reports a roughly 40% drop in trading volumes from 2024 peaks, a significant contraction in derivatives open interest, eight consecutive weeks of net outflows from institutional crypto products, and rising exchange reserves—signals of persistent selling pressure. Jefferies attributes continued downside to global risk-off sentiment driven by restrictive central bank policies, geopolitical uncertainty, regulatory divergence, and higher correlation with tech stocks. Historical cycle comparisons (2018–2019, 2022–2023) show the current decline is shorter so far but deeper than some prior phases, suggesting more time may be required to reach a sustainable bottom. Despite the bleak near-term view, Jefferies highlights long-term positives: maturing regulation (e.g., MiCA), improved institutional-grade custody and trading infrastructure, and ongoing traditional financial institution engagement. The bank expects recoveries to be led by projects with clear revenue models, sustainable token economics, real-world utility, and demonstrated institutional adoption. Traders should monitor liquidity metrics, institutional flows, exchange reserves, and fundamentals for early recovery signals. This analysis is informational, not trading advice.
Bearish
Jefferies’ data point to continued downside pressure: ~40% decline in trading volumes, contracted derivatives open interest, eight straight weeks of institutional product outflows, and rising exchange reserves all indicate selling dominance and weaker liquidity. Macro drivers—restrictive monetary policy, geopolitical risk, regulatory uncertainty, and higher correlation with tech stocks—amplify risk-off behavior. Historically, market bottoms have required prolonged low volatility and accumulation by long-term holders; those signals are absent. In the short term, expect elevated volatility, continued outflows, and selective weakness concentrated in speculative projects. In the medium-to-long term (18–36 months), structural positives—clearer regulation, improved custody/trading infrastructure, and institutional build-out—could support recovery, likely led by projects with revenue-generating models and real-world utility. Comparable past downturns (2018–2019, 2022–2023) show recoveries follow extended consolidation and restoration of liquidity, suggesting traders should wait for confirmed accumulation, stabilizing volumes, and improving institutional flows before shifting to bullish positioning.