Institutional Interest In Bitcoin And Ethereum Is Fading, Says JPMorgan

Financial markets do not react solely to numbers, but also to the feelings and expectations of investors. In the crypto universe, where volatility is the norm, every signal emitted by a major institution can influence trends. This time, it is JPMorgan that throws a stone in the pond: the American bank believes that the Bitcoin and Ethereum market faces an increased bearish risk due to a disengagement of institutional investors. Such an analysis is based on the evolution of futures contracts from the CME, which show signs of critical weakness.

JPMorgan points to a decline in institutional demand

Institutional investors’ enthusiasm for cryptos seems to have waned in recent weeks, according to a JPMorgan report led by Nikolaos Panigirtzoglou. Indeed, the bank observes a sharp decline in demand for Bitcoin and Ethereum futures contracts from the CME, a key indicator of the interest of major market players. The total market capitalization of crypto has dropped by 15%, decreasing from $3.72 trillion to $3.2 trillion, a movement that has been accompanied by a backwardation situation on the futures contracts. In other words, the prices of these contracts have fallen below those of the spot market, a configuration that generally reflects a growing disinterest from professional investors.

This trend particularly worries JPMorgan, which sees it as a structural bearish signal. In its report, the bank explains: “This is a negative development, indicating weakness in demand from institutional investors who are using regulated CME futures contracts to gain exposure to these two cryptos.” A lack of interest from major financial institutions can cause a sharper decline, as the crypto markets have historically been influenced by these capital flows.

The crypto market facing uncertainty and profit-taking

If institutional investors are easing off, it is largely due to a macroeconomic context less conducive to increased risk-taking. Thus, according to JPMorgan, major policy decisions surrounding cryptos in the United States are not expected before the second half of the year, which allows for a period of uncertainty. Without strong catalysts, some players prefer to take their profits while awaiting clearer signals.

Other factors weigh on demand. JPMorgan points out that momentum trading funds, notably commodity trading advisors, are reducing their exposure, further intensifying the selling pressure in the market. These trading strategies, which are based on trend strength, have become less optimistic about Bitcoin and Ethereum in recent months. A weakening of momentum technical signals means that these influential players are adopting a more cautious stance, reinforcing the risk of steeper corrections.

The question now is whether this decline in institutional demand is merely a temporary retreat or the beginning of a longer bearish cycle. Some experts, such as those from AllianceBernstein, believe that this type of correction is normal in a bullish cycle and could represent an accumulation opportunity for long-term investors. Others, however, emphasize that macroeconomic uncertainties and the wait for regulatory decisions could maintain prolonged selling pressure. One certainty: the crypto market is entering a pivotal phase where every signal will be scrutinized closely.