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JPMorgan's recent research report indicates that the analysis of open interest in the bitcoin (BTC) futures on the Chicago Mercantile Exchange (CME) suggests the conclusion of the unwinding of long positions, rather than its initial stages. This observation was made on Thursday.

Open interest pertains to the overall quantity of unfulfilled derivative contracts, including options or futures, that have not yet been resolved.

“As a result we see limited downside for crypto markets over the near term,” analysts led by Nikolaos Panigirtzoglou wrote.

The correction in crypto markets in August, “which reversed the post Securities and Exchange Commission (SEC) versus Ripple court decision rally” can be partly credited to the “broader correction in risk assets such as equities and in particular tech, which in turn appears to have been induced by frothy positioning in tech, higher U.S. real yields and growth concerns about China,” the report said.

JPMorgan stated that the announcement by Elon Musk's SpaceX about liquidating its bitcoin holdings in the previous quarter served as an “additional catalyst for the correction in crypto markets.”

“These news caught up investors with an overhang of long positions,” the note said.

The SEC is lodging an appeal against the decision of the district court in the Ripple case. As the result of the appeal is not anticipated until the following year, there is potential for triggering a “new round of legal uncertainty for crypto markets,” as highlighted in the report..