According to a JPMorgan report released Wednesday, the cryptocurrency market is experiencing weak demand, with institutional investors withdrawing from Bitcoin (BTC) and Ethereum (ETH) futures. Analysts noted that Bitcoin and Ethereum futures are selling for less than their current prices, a sign that investors are not confident about short-term growth.
JPMorgan’s team explained that when demand is strong, futures usually sell for more than the current price, as traders expect prices to rise. However, the fact that futures prices As of February 12, BTC futures were priced at $0.23, but by February 19, they were lower than today’s prices, which had fallen to $0.18. This suggests that investors are uncertain and hesitant to invest.
Investors Cash Out as Crypto Lacks Excitement
As per JPMorgan, one main reason for the declining demand in the crypto market is that there are no immediate positive catalysts available. While Trump’s administration is also expected to introduce pro-crypto policies, the bank has noted that these initiatives are unlikely to take effect until the second half of the year.
As a result, institutional investors appear to be locking in profits rather than holding onto positions at this point to take advantage of future gains available in the market.
The report describes a reduction in activity of subsystem and momentum-driven funds such as Commodity Trading Advisors (CTAs) who have contributed to the decline in futures demand. Such funds typically follow price trends, and the lack of any strong upward momentum in the crypto market has led to them not wanting to enter large positions that can influence the pricing of futures.
Market Outlook Continues to Remain Uncertain
The crypto markets recently saw significant rallies, and JPMorgan has made a recent analysis that Bitcoin and Ethereum are unlikely to remain under pressure in the short term. However, despite this, the bank is optimistic that regulations introduced by Trump’s administration that favour the trade of crypto assets could result in a rise in demand once again.
At present, the market continues to struggle with weak sentiment and casual investment from the key institutions; this leaves potential investors to toe the line on what measures could be taken by policy to help and reignite growth within the sector.
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