Warning From JPMorgan: The Cryptocurrency Market May Face New Challenges

In the context of the cryptocurrency market witnessing a strong correction, JPMorgan analysts have just issued a warning that signals of decline may soon emerge as institutional investment demand for Bitcoin and Ether futures contracts on CME is noticeably decreasing. Recent Market Situation According to analysts, the market value of cryptocurrencies has decreased by about 15% from the peak of 3.72 trillion USD on December 17 to around 3.17 trillion USD. This adjustment has brought Bitcoin and Ether futures contracts on the CME exchange closer to a state of 'backwardation' - a phenomenon where the futures price is lower than the spot price. This is similar to what happened in June and July last year, reflecting the imbalance between supply and demand in the market. JPMorgan Analysis JPMorgan analysts point out that when demand for futures contracts is strong, these contracts often trade at a higher price than spot – a phenomenon known as "contango." This spread can exceed 10% per year, largely due to the "low-risk" interest rates in the cryptocurrency space, where borrowing USD can yield returns of 5% to 10% annually. However, when expectations of price decline weaken and demand decreases, futures contracts no longer trade at a premium but may switch to "backwardation." The two main reasons cited include: The withdrawal of investment institutions: Some institutional investors are withdrawing positions when there is no clear positive incentive to continue investing. Signals from the new U.S. government are expected to bring about significant fluctuations only by the end of this year, causing institutions to be more cautious in the current period. Pressure from trend-following funds: Funds such as commodity trading advisors have gradually reduced investment positions, further weakening market momentum. At the same time, both Bitcoin and Ethereum have lost some of their growth momentum, with Ethereum even showing a negative trend. Impact of Bitcoin ETF Furthermore, the demand for Bitcoin ETFs is showing signs of slowing down, although still maintaining a positive level according to the CEO of Cryptoquant, Kim Young Ju. He mentioned that the (bull cycle) may continue until significant capital outflows from the ETFs occur, as prolonged negative cash flow will signal the start of a (bear cycle). According to him, 'New supply and demand are the determining factors; everything else is just market noise.' Perspectives From Cryptocurrency Investors Despite warning signals from JPMorgan and current market trends that may make many investors cautious, Bitcoin enthusiasts continue to encourage the investment community into this asset. One prominent voice is Robert Kiyosaki, who has called on everyone to start accumulating Bitcoin along with gold and silver - the "real money" that can help build wealth in the future. According to Kiyosaki, these assets not only protect asset value but also are the key to long-term financial success. Conclusion The cryptocurrency market is currently facing signs of instability with a significant decrease in investment demand from large institutions, while witnessing strong adjustments in futures contracts on the CME. Despite the negative signals, Bitcoin investors and enthusiasts continue to believe that the market can recover, especially as demand from ETFs remains positive. However, all investors should closely monitor the signs of change in the market to make timely and reasonable investment decisions.