The Cryptocurrency Market lacks positive catalysts in the short term, Wall Street Bank JPMorgan (JPM) said in a report Wednesday.
The correction in crypto markets in recent months has seen both Bitcoin (BTC) and Ether (ETH) futures near back, which is a sign of lower demand, the report said. Bagwardation occurs when the spot price for an asset is higher than the price trade in the futures market.
“This is a negative development and sign of demand weakness from the institutional investors who use regulated CME future contracts to get exposure in these two cryptocurrencies,” analysts wrote that Nikolao’s Panigirtzoglou wrote.
If the demand for Bitcoin and Ether Futures is healthy, the futures cost more than the spot price and the curve is said to be in Contango, the bank noted.
When demand brakes and the price expectations are softened, the future curve moves towards the back, the bank added.
This weakness in demand can be due to a number of reasons.
Positive cryptoinitiatives from Trump’s new administration are more likely to kick in during the second half, the bank said, and that means institutional investors are likely to make a profit due to short -term catalysts.
Lower demand from systematic and momentum -driven agents, such as CTAs, has also affected Bitcoin and Ether Futures, added JPMorgan.
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