According to a new JPMorgan report, the cryptocurrency market needs a new catalyst to drive the sector forward and spark “enhanced retail engagement” to reverse August’s market downtrend.

What Happened: JPMorgan analysts, led by Kenneth Worthington, highlighted the broader challenges facing the crypto ecosystem, stating, “Overall, we continue to see the crypto ecosystem lacking major catalysts, and we thus expect crypto token and asset prices to be incrementally more sensitive to macro factors,” Coindesk reported.

Despite the decline in market value — the total market capitalization dropped to $2.02 trillion, a 24% decrease from its peak in March — average daily volumes (ADV) across the sector saw an 8% increase. Bitcoin BTC/USD and Ether ETH/USD posted gains of over 10% in trading activity compared to the previous month.

However, Bitcoin dropped by 8.7% and Ethereum plummeted by 22.2% in August, according to Coinglass data.

Interestingly, stablecoins were an exception to the overall market downtrend.

JPMorgan noted that stablecoin market caps grew and trading volumes also rose in August, outperforming the broader crypto sector.

However, exchange-traded funds (ETFs) tied to major cryptocurrencies like Bitcoin and Ether underwhelmed investors.

The report noted that Ethereum ETFs failed to generate excitement compared to Bitcoin ETFs launched earlier this year.

Spot Bitcoin ETFs saw particularly weak performance, with net outflows totaling $81 million in August.

What’s Next: As the crypto industry looks for its next growth trigger, the ongoing discussions around digital assets are expected to be a hot topic at Benzinga's Future of Digital Assets event on Nov. 19, where market leaders will address the challenges and opportunities shaping the next phase of crypto innovation.

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