JPMorgan warns of upcoming Bitcoin bear market, citing “unusual development” in futures – Bitcoin News

Investment bank JPMorgan Chase has warned of another bitcoin price drop and expected an imminent bear market. The bank’s analysts look at the trend in Bitcoin futures and see “an unusual development and a reflection of the currently weak Bitcoin demand from institutional investors”. However, a number of people disagree with this analysis.

JPMorgan warns of upcoming bear market

JPMorgan Chase analysts, led by Nikolaos Panigirtzoglou, warned of an impending Bitcoin bear market in a notice to investors last week.

The analysts examined Bitcoin futures, which were trading at a discount to the spot price known as backwardation. “We believe the return to backwardation has been a negative signal in the past few weeks, suggesting a bear market,” they wrote, adding:

This is an unusual development and reflects how weak Bitcoin demand is currently from institutional investors who tend to use regulated CME futures contracts to gain exposure to Bitcoin.

JPMorgan analysts confirmed that their outlook for Bitcoin was negative. They pointed to another sign that worries them – the sharp decline in Bitcoin’s share of the overall crypto market, which fell from 60% to around 40% between April and May. Analysts call this decline in BTC market share “a bearish signal that carries some echoes of the retail investor-driven foam of December 2017”.

You see similarities between the current situation and the Bitcoin crash in 2018, when investors plunged into cryptocurrencies in 2017 and exited en masse as prices fell from around $ 15,000 to $ 4,000 in 2018, JPMorgan detailed.

Some people used Twitter to disagree with JPMorgan’s analysis. For example, the Twitter account DTC Crypto Trading wrote: “The ‘analyst’ at JPMorgan says that the backwardation in BTC when prices rise is a sign of the bear market. I don’t know who is “analyzing” this, but they may want to hire better people. Pretty much every time BTC had a sustained period of backwardation, the price went up. ”Several people agreed with this analysis.

At the same time, competing investment banks are seeing enormous demand from institutional investors. Even JPMorgan CEO Jamie Dimon recently admitted that institutional clients want exposure to Bitcoin. Goldman Sachs has repeatedly said that there is tremendous institutional demand for BTC and noted that cryptocurrency has become a new asset class. Morgan Stanley is already offering some Bitcoin investments to wealthy clients due to the high demand for the crypto asset.

Bitcoin’s price spiked on Sunday afternoon after Tesla CEO Elon Musk announced that his company would accept the cryptocurrency again. At the time of writing, Bitcoin is priced at $ 38,874 based on data from Bitcoin.com Markets.

What do you think of JPMorgan’s Bitcoin prediction? Let us know in the comments section below.

Photo credits: Shutterstock, Pixabay, Wiki Commons

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