Bitcoin underwent a sharp correction last week before rebounding this week, but it still remains in "overbought territory," according to JPMorgan analysts, suggesting that the largest cryptocurrency by market capitalization could fall further.

JPMorgan analysts led by Nikolaos Panigirtzoglou wrote in a note on Thursday that two metrics — JPMorgan's futures position proxies and the bitcoin futures price premium over the spot — suggest bitcoin is still overbought.

These metrics indicate only small unwinding of positions so far, according to the analysts. "Both metrics indicate that bitcoin remains in overbought territory despite the sharp correction over the past week," they said.

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