JPMorgan Warns of Bitcoin Overbuying Despite Price Dip
JPMorgan, a prominent global investment bank, has issued a cautionary note regarding the status of bitcoin, indicating that despite a recent price decline, the cryptocurrency remains overbought. Led by global strategist Nikolaos Panigirtzoglou, JPMorgan’s analysts foresee continued selling pressure on bitcoin, especially with the halving approaching, against a backdrop of overbought positioning.
The bank's analysts highlighted two key metrics, namely JPMorgan’s futures position proxies and the price premium of bitcoin futures compared to the spot price, to illustrate that bitcoin is still in overbought territory despite the notable correction in the past week.
Moreover, JPMorgan raised concerns about the recent slowdown in spot bitcoin exchange-traded fund (ETF) inflows, indicating a potential challenge to the optimistic forecasts of year-end price increases. Although there were expectations for sustained demand driven by bitcoin ETFs and the impending Bitcoin halving, recent data suggests that the flow of funds into spot ETFs may not be as steady as previously anticipated.
In terms of recent market trends, while there were weeks of inflows, 10 spot bitcoin ETFs experienced outflows last week, with Grayscale’s bitcoin trust (GBTC) particularly seeing significant withdrawals. On the other hand, nine spot bitcoin ETFs, excluding GBTC, accumulated $1.3 billion in BTC in just six days.
Looking ahead, the JPMorgan analysts predict that profit-taking is likely to persist as the halving event approaches, especially given the overbought positioning despite the recent correction.
This cautionary stance follows JPMorgan's earlier bearish warning, forecasting a potential drop in bitcoin’s price to $42,000 post-April halving. The bank also downplayed the significance of both the halving and the upcoming Ethereum upgrade, suggesting that these events have already been priced into the market.
Panigirtzoglou previously noted the unrealistic expectation for bitcoin to match gold within investors’ portfolios in notional amounts. Additionally, JPMorgan CEO Jamie Dimon reiterated his skepticism towards cryptocurrencies, stating his personal disinterest in buying bitcoin.