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Bitcoin Remains Overbought Despite Recent Correction, JPMorgan Says
The pace of net inflows into spot bitcoin ETFs has slowed considerably, with a significant outflow recorded in the past week, the report said.
Updated Mar 22, 2024, 6:09 p.m. Published Mar 22, 2024, 8:53 a.m.
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- JPMorgan says bitcoin remains overbought.
- Spot ETFs witnessed a significant outflow in the past week.
- Bitcoin profit-taking could continue into the halving event, the bank said.
Cryptocurrency markets suffered a sharp correction in the past week with the price of bitcoin falling by over 15% before rebounding after the Federal Open Market Committee (FOMC) meeting on Wednesday. The sell-off may not be over as positioning still looks overbought, JPMorgan (JPM) said in a research report Thursday.
“There remains considerable optimism in the market over the prospect for prices rising significantly by year-end, with a significant component of that optimism arising from a view that bitcoin demand via spot exchange-traded funds (ETFs) would continue at the same pace even as the supply of bitcoin diminishes after the halving event,” analysts led by Nikolaos Panigirtzoglou wrote.
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The quadrennial reward halving is when miners’ rewards are cut in half. The next halving is expected in mid-April.
However, the bank notes that the pace of net inflows into spot bitcoin ETFs has slowed considerably, with a significant outflow recorded in the past week.
“This challenges the notion that the spot bitcoin ETF flow picture is going to be characterized as a sustained one-way net inflow,” the authors wrote.
“In fact, 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,” the report said.
Read more: Bitcoin Halving May Have a Positive Impact on Prices, But Other Factors Still at Play: Coinbase
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