Bitcoin fell less than 2% on Friday. The price was around $ 37,477, while rivals Ethereum and Dogecoin traded lower at around $ 2,475 32 cents, according to Coindesk.
According to JP Morgan, the recent rally in bitcoin price is unlikely to last long.
Bitcoin is up 15% since hitting a low of $ 33,472 per coin on Tuesday, but JP Morgan analysts believe the change in market structure indicates further weakness. The cryptocurrency has dropped 41% from its April high.
“Bitcoin futures backwardation – bearish signal“Written by JP Morgan analysts. They noted that this was the first time the market began to pull back after the bear market wiped out 83% of the value of the cryptocurrency.
Backwardation occurs when the spot price is higher than the futures price, which means that investors are willing to pay a premium to hold bitcoin now.
Concerns about El Salvador
The International Monetary Fund is concerned about El Salvador’s decision to make Bitcoin a parallel legal tender.
The concerns are both economic and legal, and further cloud the prospects for the IMF-backed program and widening the country’s bond spreads, according to Reuters.
El Salvador became the first country in the world to accept Bitcoin as legal tender.
Foreign investors, worried about the future of the deal with the IMF, which they consider important for the Central American country, are demanding higher premiums to hold on to Salvadoran debt, according to Reuters.
El Salvador’s law means that bitcoin will be on par with the dollar, which became its official currency 20 years ago.
El Salvador bonds traded lower on the curve on Thursday, with 2027 and 2052 both losing 1 cent on the day.