The cryptocurrency market is currently confronting short-term downward risks due to diminishing interest from institutional players in CME Bitcoin
$97,427 and Ethereum
$2,739 futures. JPMorgan analysts have highlighted a “pullback” signal in futures that suggests potential declines below spot prices. This situation mirrors a similar trend observed during June and July of the previous year.
Weakness in Bitcoin and Ethereum Futures Becomes Apparent
JPMorgan analysts noted that the total value of the cryptocurrency market dropped from $3.72 trillion on December 17 to $3.17 trillion, marking a 15% decline. During this correction phase, CME Bitcoin and Ethereum futures have been trading below spot prices, indicating a reduction in institutional demand. Typically, futures contracts trade above spot prices when there is strong demand. However, JPMorgan analysts observed a reversal of this trend in recent Bitcoin and Ethereum futures, signaling waning interest from large investors.
Institutional Withdrawals and Momentum Loss Impacting the Market
According to JPMorgan, the weakening demand for CME Bitcoin and Ethereum futures stems from two primary factors. Firstly, some institutional investors are cashing out due to the absence of significant catalysts to drive prices higher. Secondly, the new U.S. administration’s lack of forthcoming actions on cryptocurrency regulations is leading investors to adopt a wait-and-see approach.
Bitcoin and Ethereum Futures
Additionally, momentum-focused funds, particularly commodity trading advisors, are reducing their Bitcoin and Ethereum positions. Analysts have indicated a downtrend in momentum indicators for both cryptocurrencies, with Ethereum’s momentum signal transitioning into negative territory. These developments are putting pressure on the prices of Bitcoin and Ethereum. Changes in the futures market often reflect in the spot market, leading analysts to predict that Bitcoin and Ethereum may remain under pressure in the short term.