Bitcoin has experienced a decline of more than 10% from its all-time high, with demand for bitcoin exchange-traded funds (ETFs) showing signs of moderation, while analysts at JPMorgan Chase and Co. warn that this pullback could have larger consequences, Bloomberg reported Friday.
A group of 10 Bitcoin ETFs recently witnessed the largest four-day outflow since the products were introduced on January 11. Meanwhile, the world’s largest cryptocurrency is experiencing one of its worst weeks this year, posting a 4% decline. At the time of this writing, the price of BTC was around $65,400.
Bitcoin continues to be overvalued
JPMorgan strategists reiterated their belief that bitcoin still appears overvalued, reiterating their February forecast that there could be further declines before the long-awaited halving in April.
JPMorgan’s strategists, led by Nikolaos Panigirtzoglou, believe that a decline in ETF flows and continued open interest in Bitcoin futures on the CME are providing a significant signal for a decline in Bitcoin’s price.
Net inflows into Bitcoin ETFs have fallen significantly, with a significant outflow reported last week. In a note published Thursday, they said this undermines the view that bitcoin flow in ETFs will be characterized as a sustained one-way net inflow.
As we approach halving, it’s increasingly likely that profit-taking will continue, especially with positioning that still looks overbought despite last week’s correction.
JPMorgan last month predicted that as the euphoria surrounding Bitcoin’s halving subsides, the price of BTC will gradually fall to $42,000 after April.
According to Naeem Aslam, chief investment officer at Zaye Capital Markets, interest among retail investors may be waning, despite BTC reaching a record price of nearly $73,798 on March 14.
Aslam said: “The fact that the rally didn’t really start at the highest level in history, as before, has caused many to question its strength.”
“Halving is almost upon us, and if this event doesn’t maintain the momentum, it means we’re in for a major pullback that could push the price below $50,000.”
Despite the recent decline, Bernstein expects a rise to $90,000
Despite Bitcoin’s recent price decline, investment firm Bernstein has raised its year-end forecast for the cryptocurrency. In a research note, Bernstein revised its target price for Bitcoin to $90,000, up from its previous forecast of $80,000.
The firm also expressed optimism about the stocks of cryptocurrency mining companies, citing bitcoin’s recent rise to around $74,000 and the positive reaction to new BTC ETFs. Analysts Gautam Chhugani and Mahika Sapra of Bernstein highlighted several factors contributing to their positive outlook.
They mentioned the start of a new bull cycle on BTC, strong inflows into ETFs, aggressive expansion of miners’ capacity and record high miners’ revenues. These factors make bitcoin miners an attractive investment option for equity investors seeking exposure to the cryptocurrency market.
