The rally in Bitcoin’s price could face challenges as it remains below $100,000. Analysts at JPMorgan note a significant decrease in institutional interest within the cryptocurrency sector, particularly regarding Bitcoin and Ethereum futures contracts.
Decline in Institutional Demand and Weakness in Futures Market
In the past year, institutional investors have been a crucial driver for Bitcoin’s price increases and played a significant role in pushing Bitcoin above the $100,000 threshold. Nevertheless, since surpassing this point, Bitcoin has struggled to gain further traction, indicating a slowdown in institutional investments.
JPMorgan analysts confirmed this decrease in institutional investments in a recent client update. One key takeaway from their analysis is the noticeable decline in the Bitcoin and Ethereum futures markets on the Chicago Mercantile Exchange (CME). Their research points out a rising occurrence of backwardation, where spot prices are higher than futures prices.
In a typical market, futures contracts are priced higher than the spot prices because of anticipated future growth. However, the current market inversion indicates caution among institutional players, likely due to an absence of immediate bullish triggers.
“This is a concerning trend and reflects a weakening demand,” wrote JPMorgan analyst Nikolaos Panigirtzoglou in a recent note to clients. “Reduced demand from systematic and momentum-driven funds, such as CTAs, has also impacted bitcoin and ether futures,” he further explained.
Regarding potential bullish catalysts, enthusiasm surrounding crypto-friendly measures from the new Trump administration in the US has significantly waned. Supportive policies or regulatory changes for the crypto sector are not anticipated until the latter half of 2025. Consequently, Bitcoin and the broader market find themselves in a state of uncertainty without any bullish drivers, leading to ongoing profit-taking.
Concerns About Market Manipulation
In addition to changes in institutional sentiment, there are growing suspicions of artificial market suppression within the crypto community. Industry figures, such as Samson Mow, CEO of Jan3, have raised alarms that Bitcoin’s struggle to maintain upward momentum above $100,000 seems to be “manufactured.”
He suggests that large market players are selling while retail investors continue to dollar-cost average and purchase. These claims are not new, as Bitcoin’s history has often been marked by allegations of price manipulation by larger investors. The recent uptick in institutional investment could make such manipulation even more feasible compared to previous market cycles.
As of this writing, Bitcoin is priced at $96,180, reflecting a 2% decrease in the last 24 hours. Given the current outlook, Bitcoin may continue to consolidate around the $100,000 level in the short term, at least until the latter part of 2025. However, analysts’ long-term price projections for Bitcoin vary widely, ranging from $150,000 to $2 million.
Featured image from Sky News, chart from TradingView
