Bitcoin Pullback and ETF Demand Moderation
Bitcoin has recently experienced a pullback of more than 10% from its all-time high, and the demand for spot Bitcoin exchange-traded funds (ETFs) is showing signs of moderation. Analysts at JPMorgan Chase and Co. have cautioned that this retreat may have more room to run.
The group of 10 spot Bitcoin ETFs recently witnessed its largest four-day outflow since the products were introduced on January 11. Additionally, the world’s largest cryptocurrency is on track for one of its worst weeks this year, with a 4% retreat. At the time of writing, BTC was trading at around $65,400.
Bitcoin is Still Overbought
JPMorgan strategists have reiterated their belief that Bitcoin still appears overbought and have renewed their prediction of further declines leading up to the highly-anticipated halving event in April. This event will reduce the supply of newly minted BTC from miners.
The sustained open interest in CME Bitcoin futures, coupled with declining ETF flows, are seen as significant bearish signals for Bitcoin’s price according to JPMorgan strategists. They stated that the pace of net inflows into spot Bitcoin ETFs has slowed significantly, with a significant outflow observed in the past week. This challenges the notion that the spot Bitcoin ETF flow picture will be characterized as a sustained one-way net inflow.
“As we approach the halving event, this profit-taking is more likely to continue, particularly against a positioning backdrop that still looks overbought despite the past week’s correction.”
JPMorgan previously predicted that the BTC price would gradually decline towards $42,000 after April as the euphoria surrounding the Bitcoin halving subsides. Retail traders may also be losing enthusiasm, as the recent rally didn’t take off from the all-time high like before.
“The halving is almost here, and if this event fails to maintain the momentum, then it means that we are going to face a serious retracement, which could cause the price to fall below $50,000.”
Bernstein Raises Year-End Forecast for Bitcoin
Despite the recent slide in Bitcoin prices, investment firm Bernstein has raised its year-end forecast for the cryptocurrency. In a research note, Bernstein revised its price target for Bitcoin to $90,000, up from the previous projection of $80,000.
The firm also expressed optimism about cryptocurrency mining stocks, citing Bitcoin’s recent rise to around $74,000 and the positive response to new spot BTC ETFs. Analysts from Bernstein highlighted several factors contributing to their positive outlook:
- The start of a new BTC bull cycle
- Strong inflows into ETFs
- Aggressive expansion of miner capacity
- Record-high revenues for miners
These factors make Bitcoin miners an attractive investment option for equity investors seeking exposure to the cryptocurrency market. Additionally, Bernstein adjusted its forecast for the upcoming halving event in April.
Hot Take: Mixed Predictions for Bitcoin’s Future
As Bitcoin experiences a pullback and ETF demand shows signs of moderation, analysts have mixed predictions about its future. JPMorgan strategists believe that Bitcoin is still overbought and may see further declines leading up to the halving event in April. However, investment firm Bernstein remains optimistic and has raised its year-end forecast for Bitcoin to $90,000.
It is important for crypto investors to carefully consider these differing perspectives and evaluate the potential risks and rewards associated with Bitcoin in the current market.
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