According to a new report by JPMorgan, the cryptocurrency market may face increased bearish risk due to declining interest from institutional investors. This development is linked to the noticeable decrease in futures contracts on Bitcoin and Ethereum.
Decline in Institutional Interest
In recent weeks, institutional investors' enthusiasm for cryptocurrencies, including Bitcoin and Ethereum, has waned, as indicated by JPMorgan's analysis led by Nikolaos Panigirtzoglou. This decrease in interest is reflected by the drop in trading of futures contracts on the CME, suggesting weaker demand among major market players. The total market capitalization of crypto has fallen by 15%, dropping from $3.72 trillion to $3.2 trillion, accompanied by a backwardation situation in futures contracts, indicating growing disinterest from professional investors.
Crypto Market Facing Uncertainty
A less conducive macroeconomic situation for increased risk-taking is leading institutional investors to retreat. JPMorgan notes the absence of major policy decisions, creating a period of uncertainty, leading players to prefer securing profits while awaiting clear market signals. Additional demand pressure comes from momentum trading funds reducing their exposure, intensifying the selling trend in the market.
Future of Institutional Demand
The question remains whether this decline in demand is merely a temporary retreat or the start of a longer bearish cycle. Experts from AllianceBernstein consider such movements as normal in a bullish cycle, providing opportunities for long-term asset accumulation. Others, however, emphasize that macroeconomic uncertainties and anticipated regulatory decisions could sustain prolonged selling pressure.
The cryptocurrency market is entering a critical phase where every new event will be closely watched by investors trying to anticipate future regulatory and market conditions.
