The post Crypto Markets To Face Downturn as Demand Drops for CME Bitcoin and Ether Futures: JP Morgan appeared on BitcoinEthereumNews.com.

JPMorgan analysts are warning that the crypto market could face more losses soon, as institutional demand for CME Bitcoin and Ether futures weakens. Crypto Market Sees Sharp Correction The total cryptocurrency market has fallen 15% from its peak of $3.72 trillion on December 17 to about $3.17 trillion, signaling a major correction. JPMorgan analysts note that this drop has pushed CME Bitcoin and Ether futures close to “backwardation”—a situation where futures prices fall below spot prices. A similar pattern was seen last June and July, raising concerns about market trends. Institutional Demand Weakens – A Bearish Sign? JPMorgan analysts explain that this shift in futures pricing suggests that institutional investors who use CME futures to gain exposure to Bitcoin and Ether are pulling back. Typically, when demand is strong, futures trade at a premium over spot prices, a situation known as “contango.” This premium, which can exceed 10% per year, is driven by high “risk-free” returns in crypto, where lending USD can yield 5%-10% annually. However, as demand weakens and price expectations drop, futures can slip below spot prices—often a bearish indicator for the market. Why Is Institutional Demand Declining? The analysts point to two main reasons for the drop in demand for CME Bitcoin and Ether futures: Profit-Taking and Market Uncertainty – Some institutional investors are cashing out due to a lack of immediate bullish triggers. Analysts also note that major crypto-related moves from the new U.S. administration are unlikely until later in the year, causing investors to hold off for now. Momentum-Based Funds Pulling Back – Trend-following funds, such as commodity trading advisors (CTAs), have reduced their crypto positions. Analysts also highlight that both Bitcoin and Ethereum have been losing momentum, with Ethereum’s price trend turning negative. Given this, they warn that crypto markets could continue facing challenges…

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Filed under: News - @ February 20, 2025 3:27 pm