The analysis of the market of cryptocurrency, which was performed by JPMorgan, undoubtedly highlighted the distinction between the spot prices of Bitcoin (BTC) and the futures prices of BTC.
Analysts of JPMorgan stated that the market of Bitcoin has reverted to backwardation in the note written to the clients on Thursday. Backwardation refers to a scenario when the future prices are lower than the spot prices. Adding to this, the analysts mentioned that the previous month’s recovery or correction in the cryptocurrency market indicated futures of Bitcoin are coming back into backwardation for the very first time since 2018.
In addition, backwardation of Bitcoins futures ought to be seen as an unpleasant sign for the price of Bitcoin despite a significant bounce back on the market (Bitcoin is more probable to hit $40,000 than $20,000, as the biggest cryptocurrency acquires 6% in a day, Bloomberg analysts) over the previous two days. JPMorgan had highlighted that the curve of bitcoin futures was declining for the majority of 2018 when the BTC lost 74% of its original worth. They further added that going into backwardation in the most recent weeks is an alarming hint which is directing towards the bear market.
Furthermore, in the most recent analysis, JPMorgan explicitly analyzed the MA of 21 days where an unusual observation was made which involved a very surprising turn of events and an impression of how frail the demand of Bitcoin is right now from the investors who take part in the trade of futures contracts on CME.
Another alarming trend was observed by analysts of JPMorgan, where BTC has somehow weakened the total share in crypto’s market value. Bitcoin’s dominance fell to a three-year low of 40% by the end of May, as stated by Cointelegraph earlier, denoting the least ever share in the course of recent years subsequent to surging more than 70% in this January.
Lastly, the total share of bitcoin in the overall crypto market hits 43% representing $682 billion out of the entire crypto market, worth $1.6 trillion. The values stated are according to the information extracted from CoinMarketCap. In addition, a few analysts such as crypto index Stack Funds accept that Bitcoin dominance has the potential to retest its past highs temporarily.