JPMorgan signals weak Bitcoin futures as a sign of a bear market

JPMorgan’s cryptocurrency market analysts have pointed to the difference between the spot prices of Bitcoin (BTC) and BTC futures prices as a possible bearish signal for the market.

On Thursday in a message to customers, JPMorgan analysts, led by global market strategist Nikolaos Panigirtzoglou, wrote that the Bitcoin market has returned to retrospective, a situation where the spot price is higher than the futures price. Analysts said last month’s correction in cryptocurrency markets caused Bitcoin futures to reverse into a retracement for the first time since 2018.

According to strategists, the backwardation of Bitcoin futures should be taken as a negative sign for the price of BTC, despite a major market rally in the past two days., with Bitcoin hitting $ 37,500 on Thursday. Analysts stressed that the Bitcoin futures curve was bearish for most of 2018, a year when Bitcoin fell 74% after hitting its peak.

“We believe the return to backwardation in the past few weeks has been a negative sign of a bear market. […] In our view, the move from Bitcoin futures to backwardation is a bearish sign that will reverberate in 2018. “

JPMorgan signals weak Bitcoin futures as a sign of a bear market
JPMorgan signals weak Bitcoin futures as a sign of a bear market

In the latest analysis, JPMorgan specifically analyzed a 21-day moving average of the second Bitcoin future split across spot prices. Analysts observed a “unusual development and a reflection of how weak demand for Bitcoin is currently from institutional investors” trade the futures contracts on the Chicago Mercantile Exchange.

Analysts also noted that Bitcoin’s weakened share of the total value of the cryptocurrency market is another worrying trend.As Cointelegraph previously reported, Bitcoin’s dominance in cryptocurrency markets collapsed to 40% in late May, which is the lowest percentage in the past three years after exceeding 70% in January.

At the time of writing, Bitcoin accounts for 43% of total cryptocurrency market cap, which is $ 682 billion of the total cryptocurrency market value of $ 1.6 trillion, according to data from CoinMarketCap.Some analysts, like crypto index provider Stack Funds, believe that BTC’s dominance could retest its previous highs in the near future.

All-time chart of Bitcoin dominance in percent. Source :: CoinMarketCap

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