JPMorgan (NYSE:JPM) has sounded the alarm on a slowdown in the cryptocurrency market. In a recent report, the financial giant observed that growth across the crypto ecosystem decelerated in January 2025. Yet, despite this cooling trend, the market’s valuation remains strikingly high. Cryptocurrency activity is still double what it was before the election—a sign of its staying power.
The report underlined that the surge in market capitalization has been concentrated in a few key players. Bitcoin (BTC), Solana (SOL), and XRP (XRP) were the standouts, driving much of the growth. However, average daily trading volumes (ADV) took a hit, with declines observed across the board.
JPMorgan’s analysts pointed to a post-election adjustment as a major factor in the current slowdown. According to them, the election acted as a catalyst for increased crypto activity, but token prices are now finding a more stable footing as the dust settles.
It’s not just token trading that’s facing challenges. Non-token sectors like decentralized finance (DeFi) and non-fungible tokens (NFTs) also saw a dip in performance. Key metrics across these areas fell month-over-month, reflecting a cooling period after December’s surge.
Regulatory Shifts Hold Promise
Even with the slowdown, the report identified some silver linings. In the new administration, the regulatory climate for cryptocurrencies has improved. The Securities and Exchange Commission (SEC), with new leadership, has launched a task force to update crypto regulations. One of the significant steps was the rescission of Statement of Accounting Bulletin (SAB) 121, a move widely appreciated by the industry.
This regulation comes at a timely juncture, coinciding with the one-year anniversary of spot U.S. bitcoin exchange-traded products (ETPs), launched in January 2024. The products have been instrumental in shaping the market, making crypto investments more accessible.
Ethereum’s Next Leap: Pectra Upgrade
Ethereum (ETH) fans also have a reason to be excited. JPMorgan’s report gave an update on Ethereum’s upcoming big upgrade, known as Pectra. To be rolled out in March 2025, the upgrade is expected to introduce some major changes to the network that may re-stimulate interest in the platform.
With the crypto market moving through its post-election period and regulatory headwinds changing, the next few months will be decisive. Whether or not the sector is able to get back on the mend remains to be determined, but one thing’s for certain: the cryptocurrency ecosystem is hardly stagnant.
