Crypto Market at Risk? JPMorgan Warns of Falling Bitcoin, Ether Demand

JPMorgan analysts are warning that the crypto market could face more losses soon, as institutional demand for CME Bitcoin and Ether futures weakens.

Crypto Market Sees Sharp Correction

The total cryptocurrency market has fallen 15% from its peak of $3.72 trillion on December 17 to about $3.17 trillion, signaling a major correction. JPMorgan analysts note that this drop has pushed CME Bitcoin and Ether futures close to “backwardation”—a situation where futures prices fall below spot prices. A similar pattern was seen last June and July, raising concerns about market trends.

Institutional Demand Weakens – A Bearish Sign?

JPMorgan analysts explain that this shift in futures pricing suggests that institutional investors who use CME futures to gain exposure to Bitcoin and Ether are pulling back. Typically, when demand is strong, futures trade at a premium over spot prices, a situation known as “contango.” This premium, which can exceed 10% per year, is driven by high “risk-free” returns in crypto, where lending USD can yield 5%-10% annually.

However, as demand weakens and price expectations drop, futures can slip below spot prices—often a bearish indicator for the market.

Why Is Institutional Demand Declining?

The analysts point to two main reasons for the drop in demand for CME Bitcoin and Ether futures:

Profit-Taking and Market Uncertainty – Some institutional investors are cashing out due to a lack of immediate bullish triggers. Analysts also note that major crypto-related moves from the new U.S. administration are unlikely until later in the year, causing investors to hold off for now.

Momentum-Based Funds Pulling Back – Trend-following funds, such as commodity trading advisors (CTAs), have reduced their crypto positions. Analysts also highlight that both Bitcoin and Ethereum have been losing momentum, with Ethereum’s price trend turning negative. Given this, they warn that crypto markets could continue facing challenges in the near term.

Bitcoin ETF Demand Slows Down

Despite weaker futures demand, CryptoQuant CEO Ki Young Ju remains optimistic. In a recent X post, he noted that while Bitcoin ETF inflows have slowed, they remain net positive. He emphasized that the ongoing bull cycle will continue unless significant ETF outflows occur.

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Meanwhile, Bitcoin supporters continue to encourage long-term investment. Financial educator Robert Kiyosaki Robert Kiyosaki Robert Toru Kiyosaki is an American businessman and author, known for the Rich Dad Poor Dad series of personal finance books Content Creator / Influencer recently urged people to start accumulating Bitcoin, gold, and silver, calling them “real money” that can build wealth over time.

Kiyosaki, a well-known advocate of financial independence, has consistently promoted Bitcoin as a hedge against inflation and economic instability. Last year, he reiterated that Bitcoin and precious metals are key to long-term financial success, believing their value will increase significantly in the future.

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