JPMorgan Warns of Further Pullback as Bitcoin Enters “Overbought” Territory
In its latest research report, JPMorgan strategists have issued a cautionary note to cryptocurrency investors. According to the strategists, Bitcoin is currently in the “overbought” territory and may experience further downward movements in the near future. This prediction aligns with their previous forecast from February, which anticipated a pullback leading up to April’s halving event.
JPMorgan’s warning comes at a time when Bitcoin has already retraced over 10% from its peak. Additionally, interest in emerging spot Bitcoin ETFs has been cooling off, with all 10 combined experiencing significant outflows in the past three days.
Decreasing ETF Flows and Open Interest in CME Futures
The JPMorgan strategists highlight two key indicators that suggest bearish sentiment for Bitcoin’s price:
- Sustained open interest in CME Bitcoin futures
- Decreasing net inflows into spot Bitcoin ETFs
According to the strategists, these factors challenge the notion of sustained one-way net inflows into spot Bitcoin ETFs. As the halving event approaches, they predict that profit-taking is more likely to continue. Despite the recent correction, the positioning backdrop still appears overbought.
Retail Traders’ Enthusiasm Fading
While Bitcoin reached an almost record-high of $73,798 on March 14, there are indications that retail traders’ enthusiasm may be fading. Naeem Aslam, Chief Investment Officer at Zaye Capital Markets, notes that the lack of significant momentum following the all-time high has raised doubts about the rally’s strength.
If Bitcoin fails to sustain momentum and consolidate its gains, Aslam predicts a substantial retracement that could bring the price below $50,000.
Consolidation Phase and Sideways Movement
Some market analysts believe that Bitcoin is entering a consolidation phase and may experience sideways movement in the near term. Crypto analyst Michael van de Poppe suggests that the local bottom has been reached and anticipates a period of consolidation for Bitcoin.
The recent correction before the Federal Open Market Committee (FOMC) meeting, followed by an upward bounce, indicates a continuation of the consolidation phase. Van de Poppe also predicts that altcoins will start to wake up slowly but surely.
Hot Take: JPMorgan Warns of Potential Bitcoin Pullback as Retail Participation Fades
In conclusion, JPMorgan’s latest research report cautions cryptocurrency investors about Bitcoin’s current position in the “overbought” territory. With decreasing net inflows into spot Bitcoin ETFs and sustained open interest in CME Bitcoin futures, there are bearish indicators for Bitcoin’s price.
Furthermore, retail traders’ enthusiasm appears to be fading as the rally’s momentum slows down. If Bitcoin fails to sustain its gains and consolidate above the $50,000 level, there could be a significant retracement.
However, some analysts believe that Bitcoin is entering a consolidation phase and may experience sideways movement in the near term. The recent correction followed by an upward bounce indicates a continuation of this phase.
As always, it’s important for crypto investors to stay informed about market trends and make well-informed decisions based on their risk tolerance and investment goals.
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