JPMorgan has expressed concerns that Bitcoin remains overbought, even after a recent market correction saw its value drop by over 15%. Despite the rebound following the Federal Open Market Committee (FOMC) meeting, the banking giant suggests the sell-off might not be over.
ETF Outflows Signal Caution
The report highlights a slowdown in net inflows into spot Bitcoin ETFs, with a noticeable outflow occurring last week. This trend challenges the previously held belief that Bitcoin demand through ETFs would maintain a steady pace, especially with the upcoming halving event that traditionally diminishes Bitcoin’s supply.
Halving Event Optimism Might Be Premature
Bitcoin’s quadrennial halving event, expected in mid-April, will reduce miners’ rewards by half. While this event has historically led to optimism for price increases due to reduced supply, JPMorgan analysts, led by Nikolaos Panigirtzoglou, caution that the current market sentiment might be overly optimistic. They argue that the expectation of continuous demand through spot ETFs might not hold, especially with the recent shift in inflow dynamics.
Continued Profit-Taking Expected
The bank’s report anticipates continued profit-taking leading up to the halving event. This is especially likely given the current market positioning, which still appears overbought after the recent correction. JPMorgan’s analysis suggests investors might need to brace for further volatility as the market adjusts to these realities.