JPMorgan says bitcoin is poised for a further slide after its 40% plunge since April - and sees echoes of the 2018 crash
JPMorgansaid the fact that bitcoin futureshave been trading below the spot price is a worrying signal.
- The bank's analysts said it reflected how weak demand for
bitcoinwas among institutional investors.
- Bitcoin has rallied over the last two days, but was still around 40% off its April record high on Thursday.
JPMorgan sees worrying signs in the bitcoin futures market.
The bank's strategists, led by Nikolaos Panigirtzoglou, said the fact that bitcoin futures have been trading at a discount to the spot price - technically known as backwardation - is a sign of weak demand from big players.
"We believe that the return to backwardation in recent weeks has been a negative signal pointing to a bear market," the strategists said in a note on Wednesday.
"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." Futures are contracts that oblige the buyer to purchase an asset at a set price at a fixed date in the future.
Bitcoin has rebounded over the last two days and was up around 4% to $37,915 on Thursday. But it was nonetheless still 40% lower than April's record high of close to $65,000.
JPMorgan's strategists said their outlook for bitcoin was negative. They said another worrying signal was that bitcoin's share of the total crypto market fell sharply during April and May from around 60% towards 40%.
Bitcoin's lower market share is "a bearish signal carrying some echoes of the retail-investor-driven froth of December 2017," they said. Amateur investors moved heavily into alternative coins as the crypto world boomed in 2017, but quickly withdrew from the market as it dropped sharply over 2018.
JPMorgan said the bitcoin futures curve was also in backwardation for most of 2018, when the
Regulatory pressures are also building. On Thursday, the top global banking regulator recommended strict new rules for financial institutions holding bitcoin.
- A student who accidentally became a millionaire with a cult following after selling his expressionless selfies as NFTs says he feels confused
- Internship at Bureau of Police Research & Development: Checkout all the details including last date, eligibility and stipend
- One of the largest cryptocurrency swapping platforms just lost $1.3 million as users failed to update approvals
- Consumers expect healthcare sector to see an increased allocation in the 2022 budget as the pandemic rages on: Kantar report
- Bharat Electronics Limited is looking to fill up 247 posts with a maximum monthly salary of ₹55,000
- iPhone SE 3, new iPad and Macs — Here’s what to expect from Apple’s spring event this year
- There are huge discounts on Nykaa, Zomato and shares of other listed tech startups
- ICICI Bank shares are sulking with the rest of the market, but analysts say it could make a lot of money for investors