Bitcoin has experienced a pullback of over 10% from its all-time high, with the demand for spot Bitcoin exchange-traded funds (ETFs) showing signs of moderation, while analysts at JPMorgan Chase and Co. have cautioned that this retreat may have more room to run, Bloomberg reported Friday.
The group of 10 spot Bitcoin ETFs recently witnessed its largest four-day outflow since the products were introduced on January 11.
Meanwhile, the world’s largest cryptocurrency is on track for one of its worst weeks this year, suffering a 4% retreat.
At the time of writing, BTC was trading at around $65,400.
Bitcoin is Still Overbought
JPMorgan strategists have reiterated their belief that Bitcoin still appears overbought, renewing a prediction made in February that further declines could occur leading up to the highly-anticipated halving event in April.
This event will reduce the supply of newly minted BTC from miners.
The sustained open interest in CME Bitcoin futures, coupled with declining ETF flows, are seen as significant bearish signals for Bitcoin’s price, according to the JPMorgan strategists led by Nikolaos Panigirtzoglou.
“The pace of net inflows into spot Bitcoin ETFs has slowed markedly, with the past week seeing a significant outflow. This challenges the notion that the spot Bitcoin ETF flow picture is going to be characterized as a sustained one-way net inflow,” they said in a note published on Thursday.
“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.”
Last month, JPMorgan predicted that the BTC price would gradually decline towards $42,000 after April, as the euphoria surrounding the Bitcoin halving subsides.
Despite BTC reaching a record high of nearly $73,798 on March 14, enthusiasm among retail traders may be waning, according to Naeem Aslam, the chief investment officer at Zaye Capital Markets.
“The fact that the rally didn’t really take off from the all-time high like before made many question the strength of the rally,” Aslam stated.
“The halving is almost here, and if this event fails to maintain the momentum, then it means that we are going to face a serious retracement, which could cause the price to fall below $50,000.”
Despite Recent Bitcoin Decline, Bernstein Expects Surge to $90,000
Despite the recent slide in Bitcoin prices, investment firm Bernstein has raised its year-end forecast for the cryptocurrency.
In a research note, Bernstein revised its price target for Bitcoin to $90,000, up from the previous projection of $80,000.
The firm also expressed optimism about cryptocurrency mining stocks, citing bitcoin’s recent rise to around $74,000 and the positive response to new spot BTC ETFs.
Analysts Gautam Chhugani and Mahika Sapra from Bernstein highlighted several factors contributing to their positive outlook.
They mentioned the start of a new BTC bull cycle, strong inflows into ETFs, aggressive expansion of miner capacity, and record-high revenues for miners.
These factors make Bitcoin miners an attractive investment option for equity investors seeking exposure to the cryptocurrency market.
Additionally, Bernstein adjusted its forecast for the upcoming halving event in April.
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