JP Morgan said that despite the recent correction, Bitcoin is still in ‘overbought territory.’

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Cryptocurrencies have rebounded this week after a sharp correction last week, but are still in “overbought territory,” according to JP Morgan analysts, suggesting that the largest cryptocurrency by market capitalization could fall further.

JPMorgan analysts led by Nikolaos Panigirtzoglou wrote on Thursday that two indicators – JPMorgan’s futures position proxy and Bitcoin futures price premium – suggest that Bitcoin remains overbought.

According to the analyst, these metrics indicate that only a small amount of positions have been liquidated so far. “Both indicators indicate that Bitcoin is still in overbought territory despite last week’s sharp correction,” they said.

‘Profit taking is likely to continue’

There is considerable optimism in the market that Bitcoin prices will rise by the end of the year due to expectations of continued demand through spot ETFs despite the decline in Bitcoin supply following the halving. However, according to JPMorgan analysts, recent data shows that net inflows into spot Bitcoin ETFs have slowed, challenging the belief that there is a continued one-sided flow of funds into spot ETFs.

“Indeed, as the halving event approaches, this profit-taking is more likely to continue, especially against the backdrop of positioning, which still appears overbought despite last week’s correction,” the analysts concluded.

Last week, analysts predicted that the price of Bitcoin would fall to around $42,000 after the halving, citing lower miner rewards and higher production costs.

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