JPMorgan Indicates Bitcoin Still Overbought Despite Recent Correction
Report Highlights Significant Slowdown in Net Inflows to Spot Bitcoin ETFs, Noting a Substantial Outflow in the Previous Week
Cryptocurrency markets underwent a notable downturn last week, witnessing a steep decline in the price of bitcoin (BTC) by more than 15%. However, following the Federal Open Market Committee (FOMC) meeting on Wednesday, there was a rebound in the price. Despite this recovery, JPMorgan (JPM) cautioned in a research report released on Thursday that the sell-off might not be complete, indicating that market positioning remains excessively bullish.
The report highlighted the prevailing optimism in the market regarding a significant increase in prices by the year’s end. A substantial portion of this optimism stems from the expectation that demand for bitcoin through spot exchange-traded funds (ETFs) would persist, even as the supply of bitcoin decreases after the halving event. The quadrennial reward halving, slated for mid-April, involves a halving of miners’ rewards.
Also, read- Bitcoin Approaches $66K Amidst Analysts’ Anticipation of Heightened Volatility Prior to Stability
Nevertheless, the bank pointed out that the pace of net inflows into spot bitcoin ETFs has considerably slowed, with a significant outflow observed over the past week. This development challenges the notion of a continuous one-way net inflow into spot bitcoin ETFs.
The report suggested that as the halving event approaches, profit-taking activities are more likely to persist, especially given the overbought positioning backdrop despite the correction observed in the past week.
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