Crypto markets are now in the green after a difficult few months, especially for Bitcoin (BTC) and Ether (ETH). Analysts are now predicting good days ahead, given the rebounds seen in the markets.
Futures markets are getting healthy again, according to JP Morgan
JP Morgan sees “significant momentum” in the cryptocurrency futures markets. The firm’s analysts are accordingly optimistic. They indicate “that the previous phase of weak demand is over”.
JP Morgan strategist Nick Panigirtzoglou highlighted the factors behind this increase in demand for futures in his latest report:
“There are clear signs of improving demand in the futures markets that indicate an increase in institutional demand for crypto. Momentum traders, such as CTAs, have likely amplified the recent price movements in crypto currencies as shorter-return period momentum signals have moved from negative to positive territory for Bitcoin and Ethereum.”
He says that such institutional buying has peaked, after several relatively quiet months. The move is said to be due to the “strong rebound in crypto markets over the past three weeks,” a recovery that “took most investors by surprise.”
JP Morgan analysts have also changed their stance on backwardation, which they previously considered a bearish signal. Backwardation occurs when the price of a futures contract near its spot price is higher than the price of that future at a more distant maturity. Trader CL at eGirl Capital reported in early June 2021 that buying Bitcoin whenever it was in backwardation had resulted in significant profits.
Bitcoin at $100,000: a “reasonable” forecast
Bitcoin and Ether have recently returned to the upside, after suffering the May 2021 crash. Bitcoin has attacked $48,000 twice, on August 13 and 16, 2021, and Ether is touching $3,330. The total capitalization of crypto markets is now targeting $2.1 trillion, approaching the mid-May peak of $2.55 trillion before the market crash.
The recovery that could lead to a recapture of the 2021 ATHs for Bitcoin are being done this time without high leverage, unlike the bullish rally of late 2020. FRNT Financial CEO Stephane Ouellette had said in an interview on Bloomberg’s “QuickTake Stock” that this portends a strong rally:
“Typically, we see this as more of a strong hand rally, which implies that the leverage part of the rally comes later.”
The $100,000 target for Bitcoin then becomes quite “reasonable” in his opinion:
“The last time we saw a move to this small leverage, we were pointing to $20,000, and we didn’t really see the leverage come into the market aggressively until we got to $40,000, which brought us to $65,000.”
The rally in the cryptocurrency markets is supported by many exogenous factors. In addition to the global health situation that is still challenging the world economy and continues to pose the threat of rising inflation on fiat currencies, important players in the adoption of cryptocurrencies in everyday life by the average person are also diving into the cryptosphere.