JPMorgan Chase: Weak demand for Bitcoin and Ethereum futures, cryptocurrency faces downside risk

According to The Block, JPMorgan analysts stated in a report released on Wednesday that the cryptocurrency market is facing downside risks in the short term due to weakened demand from institutions for CME Bitcoin and Ethereum futures.

Morgan Stanley analysts led by Nikolaos Panigirtzoglou pointed out that the recent downward trend in the cryptocurrency market has caused CME Bitcoin and Ethereum futures to approach a "reversal" state, where futures prices are lower than spot prices, similar to the situation in June and July last year.

Analysts say, "This is a negative development that indicates weak demand from institutional investors who use regulated CME futures contracts to gain exposure to these two cryptocurrencies

Lack of positive catalysts and kinetic energy degradation

Morgan Stanley analysts attribute the weakened demand for CME Bitcoin and Ethereum futures to two main factors. One reason is that some institutional investors seem to choose profit taking due to a lack of immediate positive catalysts. Analysts say that the major cryptocurrency related policies of the new US government may not be launched in the first half of this year, leading investors to maintain a wait-and-see attitude.

Secondly, funds that rely on market momentum, such as commodity trading advisory funds, have been reducing their exposure positions, further dragging down demand. Analysts said, "Over the past few months, the momentum signals of Bitcoin and Ethereum have been weakening, and Ethereum's momentum signal has entered the negative zone

Given these trends, analysts warn that the cryptocurrency market may continue to face pressure in the near future.