Big investors are dumping bitcoin futures and pivoting to ethereum as expectations for the world's largest cryptocurrency soften, JPMorgan says

• Institutional investors are shying away from bitcoin futures as views on the top cryptocurrency soften, JPMorgan said.
• In September, bitcoin futures have traded below the price of an actual bitcoin, analysts said.
• Big investors have begun steadily pivoting to ethereum since August amid a "strong divergence in demand."

Big-money investors are shying away from the bitcoin futures trade and pivoting instead to ethereum futures as expectations for the world's largest cryptocurrency soften, JPMorgan analysts wrote in a note on Wednesday.

In September, bitcoin futures on the Chicago Mercantile Exchange have traded below the price of an actual bitcoin, the analysts noted.

"This is a setback for bitcoin and a reflection of weak demand by institutional investors that tend to use regulated CME futures contracts to gain exposure to bitcoin," the analysts wrote.

Under healthy demand, futures usually trade at a premium to actual bitcoin. This happens because high bitcoin storage costs and the juicy yields available for passive crypto investing push up futures prices, according to previous JPMorgan research.

That dynamic makes the current weakness in futures especially bearish for bitcoin, the analysts wrote.

Meanwhile, institutional investors have begun steadily pivoting to ethereum since August. The 21-day average ethereum futures premium rose to 1% over actual ether prices, according to CME data cited by JPMorgan, showing a "strong divergence in demand."

"This points to much healthier demand for ethereum vs. bitcoin by institutional investors," the JPMorgan analysts wrote.

Ether prices have fallen 3% in the last month while bitcoin has fallen 10%.

Last week, JPMorgan's crypto guru - who also co-authored the note on institutional demand - told Insider that he expects ethereum to keep declining as it faces growing competition from the likes of solana and cardano.