JPMorgan Observes Decline in Bullish Sentiment Among TradFi Whales

The observed weakening of institutional demand for bitcoin and Ethereum futures on the CME serves as a bearish signal for the near term. This conclusion was reached by JPMorgan, reports The Block.

Analysts noted a 15% decline in the total market value of digital assets from a record $3.72 trillion in December.

As a result, futures on the first and second largest cryptocurrencies by market capitalization have approached a situation close to backwardation, similar to June and July of last year.

The more typical state is contango, where derivatives trade at a premium to the spot.

This parameter, often exceeding 10% annually, is driven by the high “risk-free” rate in cryptocurrency markets, where USD lending usually amounts to 5–10% per annum, specialists explained.

Analysts cited the lack of positive catalysts and the waning of price momentum as reasons.

Some institutional investors are taking profits due to a desire to adopt a wait-and-see approach, as US authorities’ crypto-related initiatives are unlikely until the second half of the year.

Meanwhile, momentum-driven funds are also reducing longs due to weakening signals. In Ethereum, the corresponding indicator has already turned negative.

Given these trends, analysts warned of the potential for continued selling pressure in the near term.

Alternative Perspective

QCP Capital has noted demand for high-delta call options on digital gold, indicating growing expectations of strong price increases in the future.

“We are seeing high interest in contracts with expirations in February-April. […] This is driven by Trump’s statements and speculations around the bitcoin reserve. […] Implied volatility has shifted in favor of calls across all terms, indicating market positioning for the second stage of a bull run,” the review states.

Analysts noted an improvement in the macroeconomic backdrop for risky assets in light of reduced inflationary concerns, the rise of the S&P 500 index to new highs, and the weakening of the US dollar.

Altcoins

In a conversation with The Block, BOB co-founder Dom Hartz noted that scandals surrounding LIBRA, and previously TRUMP, MELANIA, BARRON, and HAWK, have undermined Solana’s reputation and increased pressure on the altcoin market.

“The dominance of [meme tokens] in mainstream media and investor attention is waning, as seen by the decline in the value transferred on the blockchain,” the expert explained.

According to Hartz, Solana is increasingly associated with fraud and sensational headlines rather than genuine innovation.

On the other hand, Ethereum has maintained its reputation as the leading network for creators of innovative solutions. With the Pectra update on the horizon, developers and investors may refocus on ether.

Iliya Kalchev from Nexo Dispatch noted the development of the regulatory environment for cryptocurrency ETFs as an additional driver for the “new market dynamics.”

Earlier, QCP Capital noted optimism in options maturing after the activation of Pectra.

Ethereum faces “intense competition” from rival blockchain projects like Solana, according to JPMorgan analysts.