JPMorgan analysts have identified two major factors behind the dwindling demand for Bitcoin and Ethereum futures.
By Mayowa Adebajo
Edited by Julia Sakovich
Updated
3 mins read
JPMorgan analysts have reasons to believe that the crypto market stands at a risk of experiencing a downturn in the short term. In the published report, the analysts claimed that institutional interest in Bitcoin BTC $88 205 24h volatility: 1.0% Market cap: $1.75 T Vol. 24h: $28.43 B and Ethereum ETH $2 074 24h volatility: 0.1% Market cap: $250.16 B Vol. 24h: $11.67 B futures contracts have recently reduced, albeit drastically.
Going by recent data, it took just about two months for the total market capitalization of the crypto market to shed 15% of its value, from a peak of $3.72 trillion on December 17 to $3.17 trillion, where it stands now.
With this decline, however, Bitcoin and Ethereum futures on the Chicago Mercantile Exchange (CME) have also been observed to be approaching a state of “backwardation”, the report noted.
For clarity, backwardation refers to a situation where futures prices fall below spot prices, and according to Panigirtzoglou, a similar condition played out in the market in mid-2024.
This period, as the report claims, is often marked by a lack of interest on the part of institutional investors who use regulated CME futures to gain exposure into the digital assets in view.
Meanwhile, JPMorgan analysts have also identified two major factors behind the dwindling demand for Bitcoin and Ethereum futures. First, they claim that some institutional investors are taking profits on the suspicion that there are no immediate positive catalysts. More so, since there are no significant crypto-related policy initiatives in view until much later in 2025.
Furthermore, they highlighted the fact that momentum-driven funds, such as commodity trading advisors, have been scaling back their exposure to these assets.
Summarily, Bitcoin and Ethereum have both been seeing their momentum signals weakening in recent months, the analysts claim. As a fact, even some of Ethereum’s metrics may have eventually entered into the negative region.
It might be worth noting that this recent report is somewhat in agreement with an earlier survey that JPMorgan also carried out between January 9 and January 23, 2025. The earlier survey also proved that institutional investors are taking a rather cautious approach after discovering that 71% of institutional traders have no plans to engage with crypto this year.
Although the January report showed a slightly better result than the previous year (78%) in terms of hesitancy, there is no doubt that institutional adoption remains a major issue to tackle. That is, despite the significant progress that has been made on the regulatory front.
On the other hand, retail trading platforms are seeing some sort of resurgence. Robinhood, for instance, reported a 16% surge in share value, attributed to record-breaking revenues in the fourth quarter. This growth is driven by renewed retail interest in both cryptocurrency and stock markets, highlighting a divergence in engagement between retail and institutional participants.
Disclaimer: Coinspeaker is committed to providing unbiased and transparent reporting. This article aims to deliver accurate and timely information but should not be taken as financial or investment advice. Since market conditions can change rapidly, we encourage you to verify information on your own and consult with a professional before making any decisions based on this content.
Mayowa is a crypto enthusiast/writer whose conversational character is quite evident in his style of writing. He strongly believes in the potential of digital assets and takes every opportunity to reiterate this. He's a reader, a researcher, an astute speaker, and also a budding entrepreneur. Away from crypto however, Mayowa's fancied distractions include soccer or discussing world politics.
