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Bitcoin Faces Sharp Decline Amid Slowing ETF Demand, JPMorgan Warns of Further Losses Ahead of Halving Event

Bitcoin has recently experienced a significant pullback, dropping over 10% from its all-time high, amidst signs of slowing demand for spot Bitcoin exchange-traded funds (ETFs).

Bloomberg reported on Friday that analysts from JPMorgan Chase and Co. are cautioning that this downward trend could continue.

This sentiment is reflected in the substantial outflows from a group of 10 spot Bitcoin ETFs, marking the largest four-day withdrawal since these products were launched on January 11.

As it stands, Bitcoin is navigating through one of its most challenging weeks this year, with a 4% decrease in value, and is currently trading at approximately $65,400.

JPMorgan strategists, including Nikolaos Panigirtzoglou, are maintaining their stance that Bitcoin remains overbought.

They had previously forecasted in February that the cryptocurrency’s price could face further declines, especially with the approaching halving event in April, which will cut the supply of Bitcoin from mining.

These strategists point to the combination of sustained open interest in CME Bitcoin futures and the dwindling ETF flows as clear bearish indicators.

They noted, “The pace of net inflows into spot Bitcoin ETFs has slowed markedly, with the past week seeing a significant outflow.

“This challenges the notion that the spot Bitcoin ETF flow picture is going to be characterized as a sustained one-way net inflow.”

They anticipate continued profit-taking as the halving event nears, especially given the current overbought market positioning.

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Moreover, last month, JPMorgan predicted a potential decline in Bitcoin’s price to around $42,000 post-April, as the excitement around the halving event fades.

Despite reaching a peak of nearly $73,798 on March 14, the enthusiasm among retail traders appears to be diminishing, as highlighted by Naeem Aslam, chief investment officer at Zaye Capital Markets.

He remarked, “The fact that the rally didn’t really take off from the all-time high like before made many question the strength of the rally.”

Conversely, investment firm Bernstein has upgraded its year-end forecast for Bitcoin to $90,000 from $80,000, buoyed by the cryptocurrency’s recent performance and the initial reception to new spot BTC ETFs.

Analysts Gautam Chhugani and Mahika Sapra from Bernstein have expressed optimism, citing the onset of a new BTC bull cycle, robust inflows into ETFs, expansion of miner capacity, and record miner revenues.

These elements collectively bolster the attractiveness of Bitcoin miners as investment avenues for equity investors interested in the cryptocurrency space, even as Bernstein revises its expectations for the April halving event.

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Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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