By
Chimamanda U. Martha
April 26th, 2024
JPMorgan strategists expect further downside in Bitcoin price amid slowing inflows into spot Bitcoin ETFs. They believe that BTC is currently in the ‘overbought’ territory.
Soon after the FOMC commentary on Wednesday, March 20, Bitcoin (BTC) and the broader cryptocurrency market witnessed some upside move. However, after moving all the way to $70,000, Bitcoin price has retraced once again owing to waning BTC ETF demand. As of press time, BTC is trading 2.25% down at a price of $65,891 with a market cap of $1.296 trillion.
Bitcoin has retraced over 10% from its all-time high last week with JPMorgan strategists cautioning further decline in near time. On the other hand, all the nine spot Bitcoin ETFs launched in the US have registered their fourth consecutive day of outflows. On Thursday, March 21, the net outflows from spot Bitcoin ETFs stood at $95 million.
According to JPMorgan strategists, Bitcoin remains in an overbought state, reiterating their February forecast for continued declines ahead of April’s eagerly awaited halving event. The upcoming Bitcoin halving event will reduce the miner rewards from the existing 6.25 BTC to 3.25 BTC.
In a note penned by the JPMorgan strategists led by Nikolaos Panigirtzoglou, they highlighted sustained open interest in CME Bitcoin futures and decreasing flows in ETFs as significant bearish indicators for Bitcoin price. The analysts noted:
“The pace of net inflows into spot Bitcoin ETFs has slowed markedly, with the past week seeing a significant outflow. This challenges the notion that the spot Bitcoin ETF flow picture is going to be characterized as a sustained one-way net inflow. As we approach the halving event this profit taking is more likely to continue, particularly against a positioning backdrop that still looks overbought despite the past week’s correction.”
Last month JPMorgan predicted that following April, the price of Bitcoin would gradually decline towards $42,000 once the euphoria around Bitcoin halving diminishes.
Bitcoin Price Drop to $51,000 Likely
In a recent analysis, CryptoQuant CEO Ki Young Ju highlights a slowdown in Bitcoin spot exchange-traded fund (ETF) netflows, suggesting a potential shift in market sentiment.
Ju suggests that if the price of Bitcoin approaches critical support levels, demand for the cryptocurrency may rebound. Notably, a significant number of new whales, primarily comprising ETF buyers, have entered the market with a reported on-chain cost basis of $56,000.
#Bitcoin spot ETF netflows are slowing.
Demand may rebound if the $BTC price approaches critical support levels.
New whales, mainly ETF buyers, have a $56K on-chain cost basis. Corrections typically entail a max drawdown of around 30% in bull markets, with a max pain of $51K. pic.twitter.com/vZCG4F0Gh5
— Ki Young Ju (@ki_young_ju) March 22, 2024
According to Ju, historical data indicates that corrections in bull markets typically involve a maximum drawdown of around 30%. In the current scenario, this would further equate to a “max pain” level of $51,000 for Bitcoin.
