Bitcoin has logged a meaningful pullback, falling more than 10% from its all-time high, as interest in fledgling spot Bitcoin exchange-traded funds (ETFs) moderates. JPMorgan Chase and Co. strategists caution that the retreat may not be over yet, per Bloomberg.
ETF Outflows and Price Slump
The group of 10 spot Bitcoin ETFs recorded the largest three-day outflow since their introduction on Jan 11. United States-listed spot Bitcoin ETFs have now bled around $742 million in just three trading days. Bitcoin’s price is on track for one of its worst weeks of the year, with a 4% retreat to $65,415 on Friday in Singapore, as indicated by that article.
JPMorgan’s Bearish Outlook
JPMorgan strategists, led by Nikolaos Panigirtzoglou, reiterate their view that Bitcoin still appears overbought. They suggest that sustained open interest in CME Bitcoin futures, tied to declining ETF flows, are important bearish signals for Bitcoin’s price. The strategists put stress on the fact that the pace of net inflows into spot Bitcoin ETFs has slowed markedly.
Halving Event Impact
As the highly-anticipated halving event approaches in April, which will reduce the supply of newly minted Bitcoin from miners, profit-taking is expected to continue. During a halving event, the rewards offered to miners are halved, effectively reducing the supply of new Bitcoin entering the market.
Historically, these events have often caused significant price surges, making them a point of anticipation for Bitcoin enthusiasts. JPMorgan expects further declines leading up to April’s halving event, with a potential fall toward $42,000 afterward, as quoted on Bloomberg.
Market Sentiment and Retail Trader Concerns
Naeem Aslam, chief investment officer at Zaye Capital Markets, notes a possible waning in enthusiasm among retail traders. He suggests that the failure of the rally to gain substantial momentum from the all-time high may raise doubts about its strength. If the halving event fails to sustain momentum, Aslam cautions about a substantial pullback, potentially pushing the price below $50,000.
ETFs to Gain
If Bitcoin continues the pullback, investors may play inverse Bitcoin ETFs like Short Bitcoin Strategy ETF BITI. The fund offers an opportunity to gain short Bitcoin-linked exposure in an ETF through a traditional brokerage account.
The underlying S&P CME Bitcoin Futures Index measures the performance of the CME Bitcoin Futures market by tracking the nearest maturing monthly Bitcoin futures contract trading on the CME. The fund charges 95 bps in fees.
If Bitcoin falls, the slump may act as a cornerstone for the entire cryptocurrency space. Ethereum prices may also slip.Short Ether Strategy ETF SETH intends to track the S&P CME Ether Futures Index, which measures the performance of the front-month ether futures contract trading on the Chicago Mercantile Exchange. The fund charges 95 bps in fees.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
ProShares Short Bitcoin Strategy ETF (BITI): ETF Research Reports
ProShares Short Ether Strategy ETF (SETH): ETF Research Reports