Bank of America’s (BAC) research report on Friday said that there is little upside potential for the cryptocurrency markets near term.

Analysts Alkesh Shah & Andrew Moss wrote: “Low confidence, limited catalysts, and outperformance to date leave the digital assets sector stuck in a range of trading with a challenging macro background likely capping digital assets upside.”

Conversations with clients indicate that hedge funds have returned to token trading. “Momentum strategies are likely to benefit to some extent from increased volatility due to decreasing trading volumes,” the bank said.

Investors who use volatility to identify opportunities to buy in short-term trends and then sell when momentum seems to be waning, are referred to as doing momentum investing.

Bank of America expects the cryptocurrency trading volume to remain low, and retail investors will stay on the sidelines.

The report said that traditional finance (TradFi), and tech companies continue to develop blockchain applications focused on tokenizing bond issuance and demand deposits.

Oliver Knight is the editor.