JPMorgan sees weak Bitcoin futures as a warning sign for a bear market

According to JPMorgan, the Bitcoin futures curve was in backwardation for the most of 2018, a year in which BTC lost 74% of its value.


JPMorgan sees weak Bitcoin futures as a warning sign for a bear market

The disparity between Bitcoin (BTC) spot pricing and BTC futures pricing, according to JPMorgan's cryptocurrency market analysts, might be a pessimistic indicator for the market.


JPMorgan analysts lead by global market strategist Nikolaos Panigirtzoglou wrote to clients on Thursday that the Bitcoin market has reverted to backwardation, or when the spot price is higher than the futures price. Bitcoin futures reverted into backwardation for the first time since 2018, according to the analysts, following the recent slump in crypto markets.



Despite a significant market comeback over the previous two days, according to the strategists, Bitcoin futures backwardation should be considered as a bad indication for BTC price, with Bitcoin topping $37,500 on Thursday. The experts emphasized that the Bitcoin futures curve was in backwardation throughout the most of 2018, a year in which Bitcoin fell 74% from its then-historic high of $20,000 in late 2017:



“In recent weeks, we feel the return to backwardation has been a negative indication pointing to a bear market [...] The movement in Bitcoin futures into backwardation, in our perspective, is a bearish indicator that echoes 2018.”


JPMorgan focused its newest research on a 21-day moving average of the second Bitcoin futures spread over spot prices. The researchers saw a "interesting development" that "reflects how weak Bitcoin demand is right now from institutional investors" who trade futures contracts on the Chicago Mercantile Exchange.


Another worrying trend, according to the analysts, is Bitcoin's declining percentage of the whole crypto market value. As previously reported by Cointelegraph, Bitcoin's market share on cryptocurrency exchanges fell below 40% in late May, marking the lowest level in three years after rising above 70% in January.


Also read: Has Bitcoin DeFi project Sovryn truly overcome Uniswap v3 by TVL, as Pomp claims?



According to data from CoinMarketCap, Bitcoin's share of the whole crypto market capitalization is 43 percent at the time of writing, accounting for $682 billion out of the entire crypto market value of $1.6 trillion. Some analysts, such as Stack Funds, anticipate that Bitcoin's dominance would retest prior highs in the near future.


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