Despite Bitcoin’s recent correction, the asset remains in “overbought territory,” according to analysts at JPMorgan, reports The Block.
The experts referred to two futures-related metrics, which suggest that the market prices of the digital gold are inflated relative to its fair value.
“Both indicators point to Bitcoin remaining in overbought territory, despite the sharp correction over the past week,” noted the bank’s specialists in an analytical note.
On March 11, the price of the leading cryptocurrency reached a new all-time high above $72,000. During the subsequent correction, prices plummeted to $61,000.
At the time of writing, the price has recovered, and the asset is trading near $64,700.
According to the bank’s specialists, there is “significant optimism” in the market regarding Bitcoin’s continued growth by the end of the year. This sentiment is fueled by sustained demand for cryptocurrency from spot ETFs amid the approaching halving.
However, analysts believe that recent data showing a slowdown in fund inflows into exchange-traded Bitcoin funds casts doubt on the continuation of this “continuous one-sided flow.”
“In fact, as we approach the halving, this profit-taking is likely to continue, especially given the positioning that still looks overbought despite last week’s correction,” concluded JPMorgan analysts.
In February, they suggested a sharp decline in Bitcoin’s price following the block reward reduction. They estimated that prices could fall to $42,000.
The bank’s specialists believe that the cryptocurrency rally to record levels was mainly driven by retail and speculative investors. The inflow of funds into Bitcoin ETFs is not linked to new capital entering the market but is largely due to traders migrating from crypto exchanges to traditional trading platforms, they observed.
Earlier, Crypto.com CEO Kris Marszalek described the correction of digital gold after reaching highs as “healthy.” A number of industry experts share a similar view.
An analyst known as CryptoJelleNL is confident that the cryptocurrency needs a period of consolidation before rising to new record levels.