Bitcoin\u2019s recent bounce has yet to dispel doubts about its vulnerability.<\/p>\n
The cryptocurrency has jumped 10% over two days and was trading at $36,993 as of 9 a.m. in London on Thursday. While the momentum may cheer bulls, a JPMorgan Chase & Co. team said backwardation in the futures market — where the spot price is above futures prices — is a reason for caution.<\/p>\n
\u201cWe believe that the return to backwardation in recent weeks has been a negative signal pointing to a bear market,\u201d JPMorgan strategists led by Nikolaos Panigirtzoglou wrote in a note. They added that Bitcoin\u2019s relatively depressed share of total crypto market value is another concerning trend.<\/p>\n
Traders are waiting for the next catalyst to break Bitcoin from a $30,000 to $40,000 range that\u2019s been in place since a collapse from a record of almost $65,000 in April. Public criticism of the digital currency\u2019s energy needs by tycoon Elon Musk and a Chinese regulatory crackdown are among obstacles. Bulls got a bit of a lift Wednesday after El Salvador made Bitcoin legal tender.<\/p>\n
The virtual currency \u201cneeds to push into $39,460 and the top of the recent range to really attract, but we will need to see a break here for the bulls to feel we\u2019re out of this period of vulnerability,\u201d Chris Weston, head of research with Pepperstone Financial Pty, wrote in a note Thursday.<\/p>\n
The June 9 analysis from JPMorgan looked at the 21-day rolling average of the 2nd Bitcoin futures spread over spot prices. The backwardation this showed is an \u201cunusual development and a reflection of how weak Bitcoin demand is at the moment from institutional investors\u201d who use contracts listed on the Chicago Mercantile Exchange.<\/p>\n
The Bitcoin futures curve was in backwardation for most of 2018, a year when the cryptocurrency fell 74% after a spectacular boom, JPMorgan said.<\/p>\n
Meanwhile, Bitcoin\u2019s share of the overall crypto market value is 42% currently, down from roughly 70% at the start of the year, according to data from tracker CoinGecko. For some analysts, that\u2019s in part a sign of retail-driven investor froth lifting other coins.<\/p>\n
Bitcoin\u2019s share may need to top 50% to make it easier to argue the current bear market is over, the JPMorgan strategists said.<\/p>\n","protected":false},"excerpt":{"rendered":"
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