Global investment bank JPMorgan has issued a cautionary note, stating that bitcoin continues to be overbought despite the recent drop in its price. The bank’s analysts anticipate ongoing selling pressure on bitcoin, especially with the halving approaching. They highlight that the current positioning still appears overbought despite the correction seen in the past week.
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According to JPMorgan’s analysts, led by global strategist Nikolaos Panigirtzoglou, in a note released on Thursday, bitcoin remains in an “overbought territory.” This assessment suggests the possibility of further decline in the price of BTC.
The analysts explained their assessment by analyzing two metrics: JPMorgan’s futures position proxies and the price premium of bitcoin futures compared to the spot price.
JPMorgan has highlighted concerns over recent decelerations in the influx of spot Bitcoin exchange-traded fund (ETF) investments, casting uncertainty on the market’s optimistic outlook for year-end price surges. Despite initial expectations of sustained demand driven by Bitcoin ETFs and the approaching Bitcoin halving, the latest data suggests that the flow of capital into spot ETFs may not be as consistent as previously anticipated.
Following a period of consistent inflows, 10 spot Bitcoin ETFs introduced in early January experienced outflows last week, coinciding with ongoing significant outflows from Grayscale’s Bitcoin trust (GBTC). Conversely, nine spot Bitcoin ETFs, excluding Grayscale’s GBTC, amassed $1.3 billion worth of BTC within a span of six days.
During the previous month, JPMorgan issued a less optimistic prediction, foreseeing a potential drop in Bitcoin’s value to $42,000 post the April halving event. Furthermore, the bank downplayed the importance of the halving and the upcoming Ethereum upgrade, suggesting that the market has already factored in these occurrences.
Earlier this month, Panigirtzoglou stated that expecting Bitcoin to reach the value of gold in investors’ portfolios based on notional worth would be unrealistic. Meanwhile, JPMorgan CEO Jamie Dimon reiterated his caution towards cryptocurrencies, indicating that he has no intention of investing in Bitcoin personally.
