Bitcoin has risen 9 per cent in the past two days, its strongest two-day gain in about two weeks, but that has failed to dispel doubts about the fragility of the virtual currency after its collapse in May.
JPMorgan ChaseWhile the momentum may cheer bulls, the spot premium in the bitcoin futures market, where spot prices are higher than futures prices, is a reason for caution, according to a team of strategists led by Nikolaos Panigirtzoglou.
"We believe that the return of spot premiums in recent weeks is a negative signal to a bear market," JPMorgan wrote in a report on Wednesday, adding that Bitcoin's relatively low share of the total market capitalization of cryptocurrencies is another worrying trend.
Traders are waiting for the next catalyst to push Bitcoin beyond the $30, 000 to $40, 000 range. Bitcoin has fluctuated in this range since it plunged from a record nearly $65000 in April.
JPMorgan Chase's analysis looked at the 21-day rolling average spread between the second round of bitcoin futures and spot prices. This shows that the spot premium is an "unusual development that reflects the current weak demand for bitcoin from institutional investors using contracts listed on the (CME) of the Chicago Mercantile Exchange."
JPMorgan says the bitcoin futures curve was at a spot premium for most of 2018, when the cryptocurrency fell 74% after an astonishing boom.
Meanwhile, Bitcoin now accounts for 42 per cent of the overall market capitalization of cryptocurrencies, down from about 70 per cent at the beginning of the year, according to tracker CoinGecko. For some analysts, this partly suggests that a retail-driven investor bubble is boosting other cryptocurrencies.
JPMorgan strategists say Bitcoin's market share may need to exceed 50% to make it easier to prove that the current bear market is over.