JPMorgan: ‘Bitcoin Remains in Overbought Territory’
Despite the recent decrease in bitcoin’s price, JPMorgan’s analysts, lead by global strategist Nikolaos Panigirtzoglou, cautioned in a note on Thursday that the cryptocurrency is still in “overbought territory.” This implies that Bitcoin’s price may drop even further.
The analysts provided an explanation by looking at two metrics: the price premium of bitcoin futures over the spot price and JPMorgan’s futures position proxy:
Both metrics indicate that bitcoin remains in overbought territory despite the sharp correction over the past week.
JPMorgan added a warning, saying that the market’s sanguine assessment of year-end price increases was called into question by the recent slowdowns in spot bitcoin exchange-traded fund (ETF) inflows.
Although there were high expectations for continued demand driven by bitcoin ETFs and the impending halving of Bitcoin, these latest numbers imply that money may not be flowing into spot ETFs as steadily as some had thought.
Grayscale’s bitcoin trust (GBTC) suffered substantial outflows last week, despite weeks of inflows into 10 spot bitcoin ETFs that started trading in early January. In the meantime, in just six days, nine spot bitcoin ETFs—aside from Grayscale’s GBTC—accumulated $1.3 billion in bitcoin.
Regarding the future price of bitcoin, the JPMorgan analysts added:
As we approach the halving event, this profit-taking is more likely to continue, particularly against a positioning backdrop that still looks overbought despite the past week’s correction.
Following the April halving, JPMorgan predicted last month that the price of bitcoin will decrease to $42,000, so issuing a bearish warning. The bank also played down the significance of the impending Ethereum upgrade and halving, implying that the market has already taken these developments into account.
“It would be absurd to expect bitcoin to rival gold within investors’ portfolios in notional amounts,” Panigirtzoglou stated earlier this month. Jamie Dimon, the CEO of JPMorgan Bank, stated this month that “I won’t personally ever buy a bitcoin,” demonstrating his continued skepticism of cryptocurrencies.
