Institutional Demand Declines, Futures Market Signals Weakness
Institutional investors have been a major primer for Bitcoin’s price rallies in the past year and they have been influential in Bitcoin’s break above the $100,000 mark. However, since breaking above this level, the Bitcoin price has failed to push further, which is a sign of a slowdown in institutional investments.
This slowdown in institutional investments was confirmed by analysts at JPMorgan in a recent note to clients. One of the most pressing revelations from JPMorgan’s analysis is the apparent decline in the Bitcoin and Ethereum futures markets on the Chicago Mercantile Exchange (CME). The bank’s research highlights a growing trend of backwardation, a scenario in which spot prices exceed futures prices.
Typically, a healthy market sees futures contracts priced higher than the spot price due to the expectation of future growth. However, the current inversion suggests that institutional players remain hesitant, likely due to a lack of immediate bullish catalysts.
“This is a negative development and indicative of demand weakness,” JPMorgan analyst Nikolaos Panigirtzoglou wrote in a note to clients. “Lower demand from systematic and momentum-driven funds, such as CTAs, has also affected bitcoin and ether futures,” he added.
Speaking of bullish catalysts, there has been a major slowdown in the euphoria surrounding crypto-positive developments from the new Trump administration in the US. Any supportive policies or regulatory reforms for the crypto industry are unlikely to take effect until the latter half of 2025. As such, Bitcoin and the rest of the market are currently stuck in limbo without any bullish catalysts and continued profit-taking.
Allegations Of Market Manipulation
Beyond the shifts in institutional sentiment, suspicions of artificial market suppression have gained traction within the crypto community. Industry leaders, including Samson Mow, CEO of Jan3, have voiced concerns that Bitcoin’s inability to gain sustained upward momentum above $100,000 appears “manufactured.”
According to him, some large market participants are selling even as retail buyers are dollar-cost averaging and buying. These allegations are not new, as Bitcoin’s history has been punctuated by periods of suspected price manipulation by whales. The recent influx of more institutional investors even makes this price manipulation more possible than in the previous cycles.
At the time of writing, Bitcoin is trading at $96,180, down by 2% in the past 24 hours. Given the current trend, Bitcoin might continue consolidating around $100,000 in the short term, at least until the second half of 2025. However, long-term price targets from analysts for Bitcoin range from between $150,000 to $2 million.
Featured image from Sky News, chart from TradingView