Warning flare! Investment bank JPMorgan Chase has warned of further Bitcoin price decline that might lead to a bear market. And it cites unusual development in the futures space for this red phase.
Analyst over at the bank observed a trend in BTC futures, and see this unusual development as a reflection of how weak Bitcoin demand is at the moment from institutional investors. This, they forecast as a sign of a looming bear market.
In a note sent to investors last week, analysts over at the bank led by Nikolaos Panigirtzoglou, talked about how Bitcoin futures have been trading at a discount to the spot price, a spectacle known as backwardation.
They believe that this return to backwardation in recent weeks has been a negative signal that points to an incoming bear market:
“This is an unusual development and a reflection of how weak bitcoin demand is at the moment from institutional investors that tend to use regulated CME futures contracts to gain exposure to bitcoin.”
The JPMorgan analysts affirmed their outlook for Bitcoin as negative, pointing out another sign that worries them. That being the sharp decrease in the market share of the world’s most popular cryptocurrency when compared to the total crypto market.
This is a share that fell from about 60% to 40% between April and May.
The analysts call this decline in the BTC market share a bearish signal carrying some echoes of the retail investor driven froth of December 2017. They see similarities between the current situation and the Bitcoin crash in 2018 where investors did a mass exit from the market as prices plunged.
Of course, plenty of people disagree with this analysis.
Folks took to Twitter to disagree with this analysis from JPMorgan, saying that every time BTC had a sustained period of backwardation, the price moved up. And, well, these are predictions after all, and have little impact on the overall market sentiment.
In fact, price has been on an upswing lately, on the back of news that Tesla might start accepting Bitcoin again after the digital asset gets a handle on its environmental impact.
All this, while even the CEO of JPMorgan, Jamie Dimon, recently admitted that institutional clients want exposure to Bitcoin. Other organizations like Goldman Sachs also report a similar scenario, noting that the cryptocurrency has become a new asset class.
More to this beyond a simple analysis.
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