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Investment bank JPMorgan Chase has warned of a further decline in the price of bitcoin, expecting a further bear market. The bank’s analysts are examining the bitcoin futures trend and see “an unusual development and a reflection of the current weakness in demand for bitcoin from institutional investors.” However, a number of people disagree with this analysis.
JPMorgan warns of the onset of a bear market
Analysts at JPMorgan Chase, led by Nikolaos Panigirtzoglou, warned of a further bearish bitcoin market in a note to investors last week.
Analysts have looked at bitcoin futures contracts that trade below the spot price, known as the offset. “We believe the return to the backlash in recent weeks has been a negative signal pointing to a bear market,” they wrote, adding:
This is an unusual development that reflects the current weakness in demand for bitcoin from institutional investors who tend to use regulated CME futures for bitcoin exposure.
JPMorgan analysts claimed their outlook for bitcoin was negative. They pointed out another sign that worries them: the sharp decline in bitcoin’s market share in the total crypto market, which fell from 60% to around 40% between April and May. Analysts call this drop in BTC market share a “bearish signal bearing some echoes of the foam induced by retail investors in December 2017”.
They see similarities between the current situation and the bitcoin crash in 2018, when investors rushed into cryptocurrencies as they exploded in 2017 and exited en masse as prices plunged in 2018. The curve at Bitcoin futures were also lagging for most of 2018 when the price of BTC rose from around $ 15,000 to $ 4,000, JPMorgan detailed.
Some people have taken to Twitter to disagree with JPMorgan’s analysis. The DTC Crypto Trading Twitter account, for example, wrote, “So the ‘analyst’ at JPMorgan says that the slippage on BTC as the price rises is a sign of the bear market. No idea who is “analyzing” this, but they might want to hire better people. Just about every time BTC has experienced an extended period of backlash, the price has gone up. Several people agree with this analysis.
Meanwhile, rival investment banks are seeing huge demand from institutional investors. Even JPMorgan CEO Jamie Dimon recently admitted that institutional clients want exposure to bitcoin. Goldman Sachs has repeatedly stated that it is witnessing a huge institutional demand for BTC, noting that cryptocurrency has become a new asset class. Morgan Stanley is already offering bitcoin investments to high net worth clients due to the high demand for the crypto asset.
The price of Bitcoin rose on Sunday afternoon after clarification from Tesla CEO Elon Musk stating that his company will resume acceptance of the cryptocurrency “When there is confirmation of reasonable use (around 50% ) clean energy by miners with a positive future trend, Tesla will resume allowing Bitcoin transactions. At the time of writing, the price of bitcoin stands 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.
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