Bitcoin and Ether Futures Near Backwardation as Crypto Market Lacks Positive Catalysts, JPMorgan Says

The correction in crypto markets in recent months has seen both bitcoin (BTC) and ether (ETH) futures near backwardation, which is a sign of lower demand

The cryptocurrency market is showing signs of weakness in demand, according to a report by Wall Street bank JPMorgan (JPM) on Wednesday.

The correction in crypto markets in recent months has seen both bitcoin (BTC) and ether (ETH) futures trade near backwardation, which is a sign of lower demand, the report said.

Backwardation occurs when the spot price of an asset is higher than the price trading in the futures market.تأخر تجديد عقد ميسي يثير قلق برشلونة.. والسبب صادم للغاية

"This is a negative development and indicative of demand weakness by those institutional investors that use regulated CME futures contracts to gain exposure into these two cryptocurrencies," analysts led Nikolaos Panigirtzoglou wrote.

If demand for bitcoin and ether futures is healthy, the futures cost more than the spot price, and the curve is said to be in contango, the bank noted.

When demand slows and price expectations soften, the futures curve moves towards backwardation, the bank added.

This weakness in demand could be due to a number of reasons.

Positive crypto initiatives by Trump's new administration are more likely to kick in during the second half of the year, the bank said, and this means institutional investors are likely taking profits due to a lack of short-term catalysts.

Lower demand from systematic and momentum-driven funds, such as CTAs, has also affected bitcoin and ether futures, JPMorgan added.