The financial markets do not only react to figures, but also to the feelings and anticipations of investors. In the crypto universe, where volatility is the rule, each signal issued by a major institution can influence trends. This time, it is JPMorgan who throws a pavement in the pond: the American bank estimates that the Bitcoin and Ethereum market faces an increased lower risk due to an disengagement from institutional investors. Such an analysis is based on the evolution of CME's term contracts, which have signs of critical weakness.
JPMorgan points to a drop in institutional demand
The enthusiasm of institutional investors for cryptos seems to have short of last weeks, according to a JPMorgan report led by Nikolaos Panigirtzoglou. Indeed, the bank observes a clear decline in demand on Bitcoin and Ethereum of the CME term contracts, a key indicator of the interest of major market players. The total capitalization of the Crypto market fell by 15 %, and goes from $ 3,720 billion to 3,200 billion, a movement that was accompanied by a backwardation situation on term contracts. In other words, the prices of these contracts fell under those of the cash market, a configuration which generally reflects an increasing disinterest of professional investors.
This trend particularly worries JPMorgan, who sees it as a structural lowering signal. In its report, the bank explain : “This is a negative development, which indicates a weakness of the demand from institutional investors who use the regulated term contracts of the CME to expose themselves to these two cryptos”. A lack of interest in major financial institutions can cause a more marked decline, the crypto markets being historically influenced by these capital flows.
The crypto market in the face of uncertainty and profits
If institutional investors raise the foot, it is largely due to a macroeconomic context that is not conducive to increased risk. Thus, according to JPMorgan, major political decisions around cryptos in the United States are not expected before the second half of the year, which gives way to a period of floating. Without strong catalysts, some actors prefer to take their profits while waiting for lighter signals.
Other factors weigh on demand. JPMorgan underlines that the Momentum trading funds, in particular the trading advisers of raw materials, reduce their exhibition, which further accentuates the selling pressure on the market. These trading strategies, which are based on the strength of trends, have become less optimistic about Bitcoin and Ethereum in recent months. A weakening of the technical signals of Momentum means that these actors, often influential, adopt a more prudent posture, which strengthens the risk of more marked corrections.
The question is now whether this drop in institutional demand is just a temporary withdrawal or the start of a longer lower cycle. Some experts, such as those of Alliancebenstein, believe that this type of correction is normal in a bullish cycle and could represent an accumulation opportunity for long -term investors. Others, on the other hand, point out that macroeconomic uncertainties and the expectation of regulatory decisions could maintain prolonged sales pressure. Only one certainty: the crypto market enters a pivotal phase where each signal will be carefully scrutinized.
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