Janice R. Andrews
Amidst a turbulent week for the cryptocurrency market, Bitcoin has seen a notable decline, falling more than 10% from its most recent peak. The main offender responsible for this downturn? A discernible decline in the popularity of the nascent spot Bitcoin exchange-traded funds (ETFs). The future of Bitcoin is in jeopardy as analysts at JPMorgan Chase & Co. warn investors about possible additional falls.
According to the most recent statistics, there is a worrying trend: since their launch on January 11, the group of 10 spot Bitcoin ETFs has had the largest three-day outflow. This retreat coincides with what is expected to be one of the worst performing weeks for Bitcoin this year. As of 6:57 a.m. Singapore time on Friday, the token’s value has dropped by 4%, to $65,415.
Reiterating their earlier position, JPMorgan strategists—who are well-known for their perceptive market analysis—suggest that Bitcoin is still overbought. First released in February, their prediction calls for more declines in the value of the coin, particularly in the run-up to April’s much-awaited halving event that would reduce the amount of fresh Bitcoin that miners can produce.
The analysts believe that declining ETF flows and persistent open interest in CME Bitcoin futures provide strong adverse signs for the price trajectory of Bitcoin. The team, chaired by Nikolaos Panigirtzoglou, noted a notable outflow over the last week and emphasized the troubling slowing in net inflows into spot Bitcoin ETFs in a note posted on Thursday. This calls into question the widely held belief that the movement of spot Bitcoin ETFs will always be one-way.
“The pace of net inflows into spot Bitcoin ETFs has slowed markedly, with the past week seeing a significant outflow,” the analysts stated. This casts doubt on the idea that the image of the spot Bitcoin ETF flow will be defined as a consistent one-way net inflow. This profit-taking is more likely to continue as the halve event draws near, especially given the positioning background that still appears overbought despite the pullback that occurred last week.”
Naeem Aslam, chief investment officer of Zaye Capital Markets, expressed concerns about the declining excitement among regular traders, echoing JPMorgan’s thoughts. Aslam said that even though Bitcoin hit a record high of around $73,798 on March 14, many are still doubting the rally’s power since it hasn’t been able to maintain pace from this level.
“The fact that the rally didn’t really take off from the all-time high like before made many question the strength of the rally,” Aslam said. “The halving is almost here, and if this event fails to really keep the momentum going, then it means that we are going to face a serious retracement, which means that the price could fall below $50,000.”
The cryptocurrency market is preparing for more volatility in light of these events as Bitcoin struggles with declining interest from regular traders and decreased demand as an ETF. Investors are nonetheless apprehensive as April’s halving event approaches, waiting for clarification on Bitcoin’s future course in the face of a more unstable environment.
