JPMorgan analysts have expressed concern over a potential correction in the cryptocurrency market, citing declining demand for futures and waning interest from institutional investors.
Declining Demand for Futures
The analysts have noted a decrease in demand for CME futures, which have fallen below spot prices. This might indicate that institutional investors have cooled on cryptocurrencies, with some engaging in profit-taking.
Lack of Bullish Catalysts
The cryptocurrency market is struggling to regain momentum due to the apparent lack of bullish catalysts. According to Polymarket, the probability of the much-hyped federal Bitcoin reserve initiative being implemented by Apr. 29 is only 10%.
Potential Bear Market Signals
Data from SoSoValue shows that Bitcoin ETFs recorded $71 million on Feb. 20, which is another troubling sign of waning demand. CryptoQuant CEO Ki Young Ju confirms that Bitcoin ETF demand remains positive but has slowed. Prolonged negative ETF flows are likely to trigger a new bearish cycle.
The risk of correction in the cryptocurrency market is heightened by declining institutional interest and a lack of positive news, which could lead to the onset of a bear market.
