Bitcoin, the world’s largest cryptocurrency, has witnessed a retreat of more than 10% from its all-time high, signaling a cooling interest in fledgling spot Bitcoin exchange-traded funds (ETFs). As market sentiment wavers, JPMorgan Chase and Co. strategists have sounded caution, suggesting that the retreat may have more room to run.
The group of 10 spot Bitcoin ETFs is currently facing its largest weekly outflow since their debut on January 11. This comes alongside Bitcoin’s decline of 6% for the week, marking one of its worst performances this year. As of Friday, the token was trading at $63,675, down by 2.7%.
JPMorgan strategists reiterated their earlier observation that Bitcoin “still looks overbought,” echoing their February forecast of further declines leading up to April’s halving event. They pointed to sustained open interest in CME Bitcoin futures coupled with declining ETF flows as significant bearish signals for Bitcoin’s price.
According to the strategists led by Nikolaos Panigirtzoglou, the slowdown in net inflows into spot Bitcoin ETFs challenges the notion of sustained one-way net inflows. They anticipate profit-taking to continue, particularly as the halving event approaches, against a backdrop of what they perceive as an overbought market.
In a note Thursday, JPMorgan predicted that Bitcoin’s price would trend towards $42,000 post-April as the “Bitcoin-halving-induced euphoria subsides.” The recent outflows from ETFs amounted to a net $836 million from Monday through Thursday, reflecting withdrawals from the Grayscale Bitcoin Trust and a moderation in subscriptions for offerings from BlackRock Inc. and Fidelity Investments.
Despite the retreat, Bitcoin ETFs have seen significant success, garnering net inflows of $11.3 billion to date. However, the Grayscale Bitcoin Trust, which transitioned into an ETF, experienced outflows amounting to $13.6 billion.
While Bitcoin reached a record high of almost $73,798 on March 14, some experts believe that enthusiasm among retail traders may be fading. Naeem Aslam, Chief Investment Officer at Zaye Capital Markets, noted that the rally didn’t sustain momentum post-all-time high, raising questions about its strength.
Aslam expressed concerns about the upcoming halving event, suggesting that if it fails to maintain momentum, Bitcoin could face significant retracement, potentially dropping below $50,000.
As Bitcoin faces downward pressure amidst dwindling interest in spot ETFs and cautious forecasts from JPMorgan, the cryptocurrency market braces for potential further retreat. With the halving event looming, investors remain vigilant, assessing the evolving dynamics that could shape Bitcoin’s trajectory in the coming weeks.
Source: Bloomberg
