Bitcoin May Face Price Rally Threat

Bitcoin’s price rally may be under threat as it continues to trade under $100,000. Analysts at JPMorgan have observed a notable decline in institutional interest, particularly through Bitcoin and Ethereum futures contracts.

Institutional Demand Declines, Futures Market Signals Weakness

Institutional investors have been crucial for Bitcoin’s price rallies over the past year, contributing to Bitcoin’s rise above the $100,000 mark. However, since breaching this level, Bitcoin has struggled to maintain momentum, indicating a slowdown in institutional investments.

JPMorgan analysts confirmed this slowdown in a recent note. A key point from their analysis is the decline in Bitcoin and Ethereum futures markets on the Chicago Mercantile Exchange (CME), highlighting a trend of backwardation—a scenario where spot prices surpass futures prices.

In a healthy market, futures contracts are typically priced above spot prices, reflecting optimism about future growth. The current inversion suggests hesitance among institutional players, driven by a lack of immediate bullish catalysts.

“This is a negative development and indicative of demand weakness,” said JPMorgan analyst Nikolaos Panigirtzoglou. He noted that reduced demand from systematic and momentum-driven funds, like CTAs, is also impacting Bitcoin and Ether futures.

On the topic of bullish catalysts, the initial excitement surrounding a crypto-friendly stance from the new Trump administration in the US has significantly faded. Supportive policies or regulatory reforms for the crypto sector are not expected to be implemented until the latter half of 2025. Consequently, Bitcoin and the market remain in a state of uncertainty, with ongoing profit-taking further complicating the situation.

Allegations Of Market Manipulation

Alongside shifts in institutional sentiment, concerns about artificial market suppression are increasing within the crypto community. Industry leaders, such as Samson Mow, CEO of Jan3, have expressed worries that Bitcoin’s struggles to maintain upward momentum above $100,000 appear “manufactured.”

He indicated that some large market players are selling even as retail buyers continue to dollar-cost average. These concerns are not unprecedented; Bitcoin’s history has been marked by instances of suspected price manipulation by large holders, or ‘whales.’ The rise of more institutional investors may heighten the potential for such manipulation in this cycle.

As of now, Bitcoin trades at $96,180, down 2% in the past 24 hours. Given the present trend, Bitcoin might continue to consolidate around $100,000 in the short term, at least until the second half of 2025. Nonetheless, analysts project long-term price targets for Bitcoin ranging from $150,000 to $2 million.

Featured image from Sky News, chart from TradingView