Bitcoin’s value may plunge deeper than $30,000 before institutional demand for the digital asset rebounds. According to analysts at JPMorgan, led by Nikolaos Panigirtzoglou, the lack of interest from institutional investors, which has fuelled the decline in Bitcoin demand, signals an incoming bear market in the future.
JPMorgan Suggests Bear Market Outlook for Bitcoin
Panigirtzoglou opines that Bitcoin’s soaring prices may have put off major players from betting on the currency. He said, "If you ask, right now, institutional investors whether $50,000 or $60,000 is looking like an attractive level for bitcoin, they will most likely say no." He and the other analysts also pointed at the decreased market share of Bitcoin, which slipped from 60% to around 40% between April and May, to explain their projection.
In a detailed prediction, the analysts compared the current BTC market with the situation in 2018, when the flagship cryptocurrency slid from $15,000 to $4,000. The crash was a result of a pump and dump by investors who rushed to invest in the crypto when its market value was increasing. Subsequently, most of these investors exited their bets when BTC started to trade negatively.
Many Traders Disagree With JPMorgan’s Analysis
JPMorgan suggests that Bitcoin is currently trading at a discounted rate when compared to the spot price, a trend known as backwardation. Crypto experts at the investment bank state, “We believe that the return to backwardation in recent weeks has been a negative signal pointing to a bear market.”
However, not everyone agrees with this outlook. For instance, Twitter user DTC Crypto countered JPM’s assertion while maintaining that backwardation is a positive sign. In a recent update, DTC Crypto wrote:
“So the ‘analyst’ at JPMorgan says that backwardation on BTC, while the price is moving up, is a sign of the bear market. No clue who ‘analyzes’ this but they might want to hire better people. Pretty much every time BTC has had a sustained period of backwardation, the price moved up.”
In the meantime, many investment banks are becoming vocal about the rising institutional demand for Bitcoin. In fact, Jamie Dimon, the CEO of JPMorgan, admitted during congressional testimony that his clients want exposure to the asset class. Goldman Sachs reported similar findings when it revealed that “Bitcoin is now considered an investable asset. It has its own idiosyncratic risk, partly because it’s still relatively new and going through an adoption phase.” Morgan Stanley, on the other hand, is making three BTC funds available to its clients.