JPMorgan Warns of Weak Crypto Demand as Bitcoin, Ether Futures Near Backwardation

JPMorgan (JPM) analysts report that the cryptocurrency market currently lacks positive catalysts, contributing to weak demand for Bitcoin (BTC) and Ethereum (ETH) futures. Both assets have seen their futures contracts nearing backwardation, where spot prices exceed futures prices, signaling lower investor confidence.

The Wall Street bank explains that institutional investors using CME futures contracts to gain exposure to BTC and ETH typically drive demand. When this demand is strong, futures trade at a premium to spot prices, a condition known as contango. However, the shift towards backwardation indicates a decline in interest, with traders opting to take profits amid uncertain short-term market conditions.

JPMorgan attributes this trend to multiple factors. Institutional investors may be awaiting crypto-friendly policies from the Trump administration, which are expected in the second half of the year. As a result, many are securing profits rather than making new investments. Additionally, demand from systematic and momentum-driven funds, such as Commodity Trading Advisors (CTAs), has declined, further pressuring futures markets.

Without imminent bullish catalysts, Bitcoin and Ethereum could struggle to regain strong institutional demand. Until market conditions improve, JPMorgan suggests that the downward trend in futures pricing may persist, reflecting broader uncertainty in the crypto sector.