Bearish Developments
Despite the recovery off the week’s lows, JP Morgan has issued a bearish alert on Bitcoin and the broader crypto market. Analysts from the US investment bank said in a note this week that a lack of bullish catalysts and an exodus of ETF demand is creating strong headwinds for the market which could see Bitcoin turn sharply lower near-term. Overall crypto market cap has fallen by around 15% from record highs in December. Notably, the dynamic shift means that CME bitcoin prices are close to entering backwardation (futures prices fall below spot prices), which last occurred in June/July 2024.
Near-Term Downside Risks
Looking ahead, JP Morgan notes that bullish crypto catalysts from the new US administration are unlikely to materialise before H2 and as such, BTC prices are vulnerable to further downside in the near-term. The bank attributes the recent ETF outflows to this very factor with institutional investors likely judging that there is a lack of impetus for bullish exposure at this point. Additionally, JP Morgan highlights that momentum funds have been leaving the market recently given the lack of expansion signals.
Broader Bull View Remains
While the current backdrop points to continued consolidation near-term, even a further drift lower, the broader bull view remains. Recent ETF outflows can ultimately prove to be a positive for bulls as there is now plenty of capital to re-enter the market if and when bullish signals emerge from Trump to drive a fresh leg higher in the market.
Technical Views
BTC
Bitcoin prices remain in the lower half of the bull channel for now, still capped by the $100k mark. While below that level, downside risks remain with $91,750 the key support to watch. Back above $100k, focus will shift to the $107,85 highs and above.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.