- JPMorgan predicts that Bitcoin is entering bear territory.
- The prediction is based on a study of the crypto’s 21-day rolling average.
- The bank also claims that the market followed a similar pattern during the 2018 crash.
Bitcoin has formed a bullish scallop pattern over the last few days. However, financial giant JPMorgan is predicting that the top crypto is heading into bear territory.
In a report published yesterday, May 9, JPMorgan analysts are warning that the BTC slump is not over. This warning is in spite of the crypto’s price rally.
Of note, the report also highlights a 21-day rolling average of second Bitcoin futures spread across spot prices.
The bank analysts are concerned about a possible ‘backwardation’ in the BTC futures market.
To clarify, the BTC spot price is higher than its future price. In addition, the backwardation could be a sign of the prevailing low demand for BTC from institutional investors.
JPMorgan strategists led by Nikolaos Panigirtzoglou wrote:
“We believe that the return to backwardation in recent weeks has been a negative signal pointing to a bear market.”
During the 2018 market crash, the BTC futures curve was also in backwardation. In that period, BTC price experienced a massive 74% correction. Of note, that price spiral was preceded by a bull run similar to what we’ve seen this year.
The analysis also referenced BTC’s declining market dominance. Specifically, Bitcoin’s crypto dominance fell from 70%, at the start of the year, to 42% at the time of writing. The bank believes this is another bearish sign. JPMorgan claims that BTC dominance needs to remain above 50% to ward off the bears. Popular crypto analyst Lark Davis also warned of a looming death cross in a recent Bitcoin analysis. Davis explained that the technical indicator is a bearish sign that could lead to the top crypto falling below $30,000. However, the analyst does not think Bitcoin will fall lower than $28,000.