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Difference In BTC Spot and Future Prices Signals Bear Market- JPMorgan

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JPMorgan’s cryptocurrency market analysts have pointed to the difference between Bitcoin’s (BTC) spot prices and BTC futures prices as a potential bearish sign for the market.

In a Thursday note to clients, JPMorgan analysts led by global market strategist Nikolaos Panigirtzoglou wrote that the Bitcoin market has returned to backwardation — a situation when the spot price is above futures prices. The analysts said that the past month’s correction in crypto markets saw Bitcoin futures reversing into backwardation for the first time since 2018.

According to the strategists, Bitcoin futures backwardation should be viewed as a negative sign for BTC price despite a major rebound on the market over the past two days, with Bitcoin hitting $37,500 on Thursday. The analysts stressed that the Bitcoin futures curve was in backwardation for most of 2018, a year when Bitcoin dropped 74 percent after hitting its then-historic high of $20,000 in late 2017:

“We believe that the return to backwardation in recent weeks has been a negative signal pointing to a bear market. […] In our opinion the shift in Bitcoin futures into backwardation is a bearish signal echoing 2018.”

In the latest analysis, JPMorgan specifically looked at a 21-day moving average of the second Bitcoin futures spread over spot prices. The analysts observed an “unusual development and a reflection of how weak Bitcoin demand is at the moment from institutional investors” who trade futures contracts on the Chicago Mercantile Exchange.

The analysts also noted that Bitcoin’s weakened share in the total crypto market value is another concerning trend. As previously reported by Cointelegraph, Bitcoin dominance on crypto markets tanked to 40 percent in late May, marking the lowest share over the past three years after surging above 70 percent this January.

At the time of writing, Bitcoin’s share in the total crypto market capitalization is 43 percent, accounting for $682 billion out of the total crypto market value of $1.6 trillion, according to data from CoinMarketCap. Some analysts like crypto index provider Stack Funds believe that BTC dominance could retest its previous highs in the short term.

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Bitcoin Trades Above $24,000 Against Dollar as US Inflation Slows Down

The flagship cryptocurrency was accompanied by a number of altcoins in the new rally, leading to an all-round green across the crypto markets

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Bitcoin (BTC) trades above $24,000 on Thursday as inflation in the world’s largest economy, the United States slows down.

As expected, the flagship cryptocurrency was accompanied by a number of altcoins in the new rally, leading to an all-round green across the crypto markets. 

According to the Chairman of the US Federal Reserve, Jerome Powell, inflation in the United States has relatively slowed down but remains elevated. The Fed, therefore hiked the interest rate by 25 basis points (0.25). 

“Inflation has eased somewhat but remains elevated…we can now say, I think for the first time, the deflationary process has started.” Powell said during a press conference after a two days meeting of the Fed. 

Before the announcement, Bitcoin had met a strong resistance around $23,800. The news saw bitcoin trade at $24,255 according to Coinmarketcap. This is the first time BTC will tip above the $24,000 mark in 2023.

Riding on the news, a number of Altcoins including Ethereum (ETH), Binance Coin (BNB) MATIC and SAND also rose alongside Bitcoin, leading to the crypto market cap increasing by more than $40 billion shortly after the news. 

While the second most capitalised cryptocurrency, Ethereum (ETH) traded at $1,696 on Thursday, recording a single-digit gain of 8%, other altcoins such as Matic and SAND recorded a double-digit gain within a few hours after the news. Data from the Binance platform reveals. 

Furthermore, Investors King gathered that a significant number of crypto enthusiasts welcome the recent development, stating that it is a confirmation that cryptocurrency could perform well in 2023. 

Meanwhile, a well-known crypto analyst, PlanB holds the opinion that Bitcoin could be on its way to a triple top cycle which might see BTC trade above $65,000 in 2023. 

Similarly, the rising number of retail and institutional investors scooping Bitcoin and other high-cap digital currencies could help to ignite the next rally. 

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Bitcoin Sells 63% Above Global Market Price in Nigeria

Bitcoin price skyrocketed to N17.8 million or $38,630 a coin on Binance, the world’s largest cryptocurrency exchange platform mostly used by retail traders in Africa’s largest economy.

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The world’s most dominant cryptocurrency, Bitcoin is currently being sold at a 63% premium in Nigeria as foreign exchange scarcity amid the new cap on banks’ withdrawals increased demand for the unregulated virtual currency.

Bitcoin price skyrocketed to N17.8 million or $38,630 a coin on Binance, the world’s largest cryptocurrency exchange platform mostly used by retail traders in Africa’s largest economy.

In the global market, Bitcoin price stood at $23,656 per coin at about 9:37 am Nigerian time on Monday, January 30, 2023. Indicating that the digital currency is being sold at $14,974 or a 63% premium over the current price of the commodity, Investors King research has shown.

Chronic foreign exchange scarcity due to a series of weak fundamental factors has plunged the Nigerian Naira against its global counterparts since Russia invaded Ukraine in February 2022.

The Nigerian Naira is presently trading at N460 to a United States Dollar on the interbank forex section while at the parallel or black market, the local currency traded at N750 to a US$1 in the early hours of Monday.

Cryptocurrency traders and businesses in Nigeria mainly traded using the black market rate because of the inaccessibility of N460/$1. Therefore, it is the rate quoted and used on Binance Peer2Peer (p2p) platform and other foreign exchange segments where the dollar is readily available.

This wide foreign exchange rate coupled with the new Naira policy that restricted withdrawals to N500,000 per week for individuals and N5 million for corporate entities bolstered demand for digital assets.

Bitcoin price plunged from $68,990 to $15,480 in 2022 after Luna declined from $119 a coin or over $40 billion market capitalisation to zero.

Shortly after, other cryptocurrency assets like Solana, Ethereum, BNB, etc lost substantial value and kick-started cryptocurrency’s largest bearish trend since 2009.

Solana dropped from around $200 a coin to $12, currently trading at $25. Ethereum dipped from almost $5,000 to $800 per coin while BNB halted its decline at $196 before pulling back to $300 at the time of writing, still below the $600 attain in 2022.

Bitcoin is the most capitalised cryptocurrency at $448.92 billion. Year-to-date, the digital asset has returned 40.17%.

 

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Bitcoin, Other Cryptocurrencies Rebound on Thursday

Bitcoin, the world’s most dominant cryptocurrency, appreciated by 4.53% in the last 24 hours to take its gains to 12.64% in the last 7 days.

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The cryptocurrency space came alive in the last 24 hours to extend its gains for the week despite growing global uncertainties amid recession fears.

Bitcoin, the world’s most dominant cryptocurrency, appreciated by 4.53% in the last 24 hours to take its gains to 12.64% in the last 7 days.

In the last 7 days, Eth, the token of the Ethereum protocol, has gained 21.36% from about $1000 a coin it traded a week ago to $1,235.67 on Thursday.

Similarly, BNB extended its gains to $242.45, an increase of 1.40% in 24 hours and 14.33% in the last 7 days to underscore a possible shift in the financial markets towards cryptocurrency, especially with global assets, both traditional haven assets like gold and even risk assets like stocks, commodities, etc, trading at a record-low.

Bitcoin and other cryptocurrencies crashed after Luna stablecoin plunged from over $40 billion market value or $90 a coin to about $800,000 in market value or $0.00004 a coin. The huge decline and the speed in which it happens, three days, sent a shocking wave to the investment world and alerted people to the danger of investing in an unproven and regulated space like cryptocurrency.

However, seasoned traders have said it is not unique and newbies would have to learn that in cryptocurrency investing, there are bearish and bullish seasons. This, they attributed to the Bitcoin Halving, a process in which Bitcoin reward for miners is halved after every 210,000 blocks or four years.

Still, experts like Changpeng Zhao, the Chief Executive Officer of Binance and the richest cryptocurrency investor alive, had called on people to only invest in cryptocurrency projects with real-world use cases.

Popularly known as CZ and estimated by Bloomberg to have a net worth of $96 billion, had repeatedly said the cryptocurrency space is here to stay and encourages inventors and innovators to focus on solving real-life problems.

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