The investment bank JP Morgan Chase warned that Bitcoin prices will fall further and a bear market is expected. The bank’s analysts looked at the trend of Bitcoin futures and believed that “this is an unusual development that reflects how weak institutional investors’ current demand for Bitcoin is.” However, many people disagree with this analysis.
JPMorgan Chase warns of upcoming bear market
JPMorgan Chase analysts headed by Nikolaos Panigirtzoglou warned in a report to investors last week that a Bitcoin bear market is coming.
Analysts studied Bitcoin futures, whose trading price is lower than the spot price, which is called spot premium. They wrote: “We believe that the return to spot premiums in recent weeks is a negative sign pointing to a bear market,” adding:
This is an unusual development that reflects how weak institutional investors’ demand for Bitcoin is currently, and they tend to use regulated CME futures contracts to gain exposure to Bitcoin.
Analysts at JPMorgan Chase confirmed that they have a negative outlook on Bitcoin. They pointed to another sign that worries them-Bitcoin’s market share in the entire crypto market has fallen sharply, falling from 60% to about 40% between April and May. Analysts described this decline in BTC market share as “a bearish sign reflecting the bubble driven by retail investors in December 2017.”
They see similarities between the current situation and the 2018 Bitcoin crash, when investors poured into cryptocurrencies when they were booming in 2017, and withdrew on a large scale following the price collapse in 2018. The Bitcoin futures curve was also at a discount for most of 2018, when the price of BTC at JPMorgan Chase detailed that it dropped from approximately US$15,000 to US$4,000.
Some people disagree with JPMorgan’s analysis on Twitter. For example, the Twitter account DTC Crypto Trading wrote: “Therefore, the’analyst’ of JPMorgan Chase stated that when the price rises, the spot premium of BTC is a sign of a bear market. I don’t know who will “analyze” this, but They may want to hire better people. Almost every time BTC has a sustained spot premium, the price will rise.” Several people agreed with this analysis.
At the same time, rival investment banks are seeing huge demand from institutional investors. Even Jamie Dimon, CEO of JPMorgan Chase, recently admitted that institutional clients want to be exposed to Bitcoin. Goldman Sachs has repeatedly stated that it has seen huge institutional demand for BTC and pointed out that cryptocurrency has become a new asset class. Due to the high demand for crypto assets, Morgan Stanley has provided some Bitcoin investments to wealthy clients.
After Tesla CEO Elon Musk clarified that the price of Bitcoin went higher on Sunday afternoon, his company will resume accepting cryptocurrencies “when it is confirmed that miners with positive future trends (about 50%) use clean energy reasonably , Tesla will resume allowing Bitcoin transactions.” At the time of writing, according to Bitcoin.com Markets, the price of Bitcoin is $38,874.
What do you think of JP Morgan Chase’s Bitcoin forecast? Let us know in the comments section below.
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