Institutional Futures Data Signals Weak Crypto Demand, Says JPMorgan
A lack of immediate catalysts is weighing on the cryptocurrency market, according to a report from Wall Street giant JPMorgan (JPM) on Wednesday.
Recent corrections in crypto markets have pushed bitcoin (BTC) and ether (ETH) futures closer to backwardation—where the spot price of an asset exceeds its futures price—indicating reduced investor demand, the report noted.
“This is a bearish signal, reflecting weaker demand from institutional investors who use CME futures contracts to gain exposure to bitcoin and ether,” wrote analysts led by Nikolaos Panigirtzoglou.
In a strong demand environment, futures typically trade at a premium to spot prices, a market condition known as contango. However, the report pointed out that the shift towards backwardation suggests softening price expectations and declining institutional interest.
Several factors may be contributing to this downturn in demand. JPMorgan noted that potential pro-crypto policies from the Trump administration are expected to take effect later in the year, leading institutional investors to lock in profits amid a lack of short-term bullish drivers.
Additionally, the bank highlighted lower participation from systematic and momentum-based funds, such as Commodity Trading Advisors (CTAs), as another factor dampening demand for bitcoin and ether futures.
