Is Bitcoin Heading To A Bear Market?
Bitcoin’s recent rebound has yet to dispel doubts about its vulnerability.
The cryptocurrency jumped 10% in two days and was trading at $ 36,993 at 9 a.m. in London (12 p.m. UAE time) on Thursday. While the momentum may encourage the bulls, a team from JPMorgan Chase said that the backlash in the futures market – where the spot price is higher than the futures price – is cause for caution.
“We believe that the return to deport in recent weeks has been a negative signal pointing to a bear market,” JPMorgan strategists led by Nikolaos Panigirtzoglou wrote in a note. They added that Bitcoin’s relatively depressed share in the total value of the crypto market is another worrying trend.
Traders are waiting for the next catalyst to push Bitcoin from a range of $ 30,000 to $ 40,000 that has been in place since the collapse of a record high of nearly $ 65,000 in April. Public criticism of the energy needs of digital currency by Tesla founder Elon Musk and a Chinese regulatory crackdown are among the hurdles. The bulls had some momentum on Wednesday after El Salvador made Bitcoin legal tender.
Virtual currency “needs to push up to $ 39,460 and the top of the recent range to really attract, but we’re going to need to see a pause here for the bulls to feel we’re out of this period of vulnerability,” Chris Weston , head of research with Pepperstone Financial, wrote in a note Thursday.
JPMorgan’s June 9 analysis looked at the 21-day moving average of the second Bitcoin futures contract spread over spot prices. The offset this showed is an “unusual development and a reflection of the current weakness in demand for Bitcoin from institutional investors” who use contracts listed on the Chicago Mercantile Exchange to trade the cryptocurrency.
The Bitcoin futures curve was offsetting for most of 2018, a year when the cryptocurrency fell 74% after a dramatic boom, JPMorgan said.
Meanwhile, Bitcoin’s share in the overall crypto market value is currently 42%, up from around 70% at the start of the year, according to data from the CoinGecko tracker. For some analysts, this is in part a sign of a boom in retail investors that is raising other coins.
Bitcoin’s share may need to exceed 50% to make it easier to say the current bear market is over, JPMorgan strategists said.