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JPMorgan Warns of Incoming Bitcoin Bear Market Citing ‘Unusual Development’ in Futures

Investment bank JPMorgan Pursue has warned of a further bitcoin price decline, expecting an incoming bear market. The bank’s analysts look at the veer in bitcoin futures and see “an unusual development and a reflection of how weak bitcoin demand is at the moment from institutional investors.” Howsoever, a number of people disagree with this analysis.

JPMorgan Warns of Incoming Bear Market

JPMorgan Go out after analysts, led by Nikolaos Panigirtzoglou, warned of an incoming bitcoin bear market in a note to investors last week.

The analysts looked at bitcoin days which have been trading at a discount to the spot price, known as backwardation. “We believe that the return to backwardation in late-model weeks has been a negative signal pointing to a bear market,” they wrote, adding:

This is an unusual advance and a reflection of how weak bitcoin demand is at the moment from institutional investors that tend to use regulated CME futures squeezes to gain exposure to bitcoin.

JPMorgan’s analysts affirmed that their outlook for bitcoin was negative. They keen out another sign that worries them — the sharp decrease in bitcoin’s market share of the total crypto exchange, which fell from 60% to about 40% between April and May. The analysts call this decline in the BTC vend share “a bearish signal carrying some echoes of the retail-investor-driven froth of December 2017.”

They see similarities between the present situation and the bitcoin crash in 2018 when investors rushed into cryptocurrencies as they boomed in 2017 and mob exited as the prices plunged during 2018. The bitcoin futures curve was also in backwardation for most of 2018 when the toll of BTC dropped from about $15K to $4K, JPMorgan detailed.

Some people took to Twitter to disagree with JPMorgan’s scrutiny. Twitter account DTC Crypto Trading, for example, wrote: “So the ‘analyst’ at JPMorgan says that backwardation on BTC while fee is moving up is a sign of the bear market. No clue who ‘analyzes’ this but they might want to hire better individual. Pretty much every time BTC has had a sustained period of backwardation, price moved up.” Several people agreed with this opinion.

Meanwhile, rival investment banks are seeing huge demand from institutional investors. Even the CEO of JPMorgan, Jamie Dimon, recently take cognizance of that institutional clients want exposure to bitcoin. Goldman Sachs has repeatedly said that it is seeing stupendous institutional demand for BTC, noting that the cryptocurrency has become a new asset class. Morgan Stanley is already offering some bitcoin investments to stinking rich clients due to the high demand for the crypto asset.

Bitcoin’s price moved higher Sunday afternoon following clarification by Tesla CEO Elon Musk expressing that his company will resume accepting the cryptocurrency “When there’s confirmation of reasonable (~50%) clean forcefulness usage by miners with positive future trend, Tesla will resume allowing Bitcoin transactions.” At the occasion of writing, the price of bitcoin sits at $38,874 based on data from Bitcoin.com Markets.

What do you think around the bitcoin prediction by JPMorgan? Let us know in the comments section below.

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