The price of bitcoin (BTC) dropped by more than 15% during the previous week’s severe correction in cryptocurrency markets, but it later rose following the Federal Open Market Committee (FOMC) meeting on Wednesday. Positioning still appears overbought, therefore the sell-off might not be finished, JPMorgan (JPM) stated in a research report on Thursday.
The market is still very optimistic about prices rising by year-end, and a big part of that optimism stems from the belief that demand for bitcoin through spot exchange-traded funds (ETFs) will grow at the same rate even as supply declines following the halving event, according to analysts led by Nikolaos Panigirtzoglou.
The bank has noted that the pace of net inflows into spot bitcoin ETFs has slowed down significantly, with a significant outflow recorded in the last week. “This challenges the notion that the spot bitcoin ETF flow picture is going to be characterised as a sustained one-way net inflow,” the authors wrote. “In fact, as we approach the halving event this profit-taking is more likely to continue, particularly against a positioning backdrop that still looks overbought despite the past week’s correction.”