Recent data shows a slowdown in net inflows into spot Bitcoin ETFs, calling into question the belief in a continued unidirectional flow of funds into this asset class.
Bitcoin (BTC) suffered a sharp correction over the past week before rebounding in recent days. However, even the popular cryptocurrency remains in “overbought territory,” suggesting that BTC could fall further, according to JPMorgan analysts.
JPMorgan Analysis in Brief
JPMorgan analysts led by Nikolaos Panigirtzoglou wrote in a post on Thursday that JPMorgan futures position indicators and the Bitcoin futures price premium over the spot price suggest that Bitcoin is still “overbought.”
Furthermore, analysts have noted that these two metrics, so far, only indicate a “small liquidation of positions.”
“Both metrics indicate that Bitcoin remains in overbought territory despite last week’s sharp correction.” JPMorgan analysts indicated.
Likewise, despite the recent decline in BTC, there is strong optimism in the market about rising prices by the end of the year. This, driven by expectations of sustained demand through ETFs, despite a reduction in BTC supply as a result of the network’s Halving event.
“Indeed, as we approach halving, it is more likely that this profit taking will continue, especially, in a positioning context that still appears overbought despite last week’s correction,” the analysts pointed out.
However, recent data shows a slowdown in net inflows to spot bitcoin ETFs, challenging the belief in a continued unidirectional flow of funds into spot ETFs, according to analysts at JPMorgan.
“Indeed, as we approach the halving, it is more likely that this profit-taking will continue, especially in a positioning context that still appears overbought despite last week’s correction,” the analysts concluded.
JPMorgan Predicts Bitcoin Could Fall to $42,000 After Halving
JPMorgan analysts predicted in late February that the price of Bitcoin would likely fall to about $42,000 after the network halving, citing lower rewards for miners and higher production costs.
The Bitcoin network halving event will reduce BTC crypto miner rewards from the current 6.25 BTC per block to 3.125 BTC.
“The cost of production of a Bitcoin has empirically acted as a lower bound for BTC prices,” the analysts expressed. “The center point of our estimated production cost range currently sits at $26,500, which would automatically double after the halving event to $53,000,” they added.
Additionally, after the Halving event, crypto miners with below-average electricity costs and more efficient equipment “will likely survive.” However, those miners with high production costs “would have strong difficulties,” according to analysts.
Finally, the largest publicly traded crypto miners will be in a better position to withstand this “fight for survival,” according to experts, adding that similar to 2022, their market share is expected to increase after the reduction to half of the BTC network.
“There could also be some horizontal integration through mergers and acquisitions between Bitcoin miners across regions to take advantage of synergies in their businesses.” JPMorgan analysts concluded.
Despite the predictions of industry experts, it is impossible to predict with certainty what will happen. This is why investors should be aware of the risks and conduct their own research before making any investment decision in the crypto market.
By Audy Castaneda
