JPMorgan analysts see $ 40,000 as a major bitcoin battlefield that bullish traders need to recapture to keep up with the meteoric rise of the cryptocurrency.
According to a Bloomberg report on Monday, the cryptocurrency could see a further downside unless the price of bitcoin can break above $ 40,000.
According to JPMorgan’s strategists and Nikolaos Panigirtzoglou, its head of the global market strategy, greater input from the multi-billion dollar bitcoin trust owned by digital asset manager Grayscale Investments is needed. The analysis also took into account the demand for bitcoin futures contracts.
The bearish prospects are likely to be caused by a crowd of traders leaving the market due to a possible change in the short-term trend and a lack of further institutional flow, according to the report.
“The inflow to the Grayscale Bitcoin Trust is likely to have to sustain the $ 100 million a day rate over the coming days and weeks to find such an outbreak,” strategists told investors in a note Friday, citing a price violation of more than $ 40,000.
Grayscale announced on Saturday that it has increased its largest one-day increase in the firm’s existence, by more than $ 700 million in its family products, including bitcoin.
How long the digital asset manager can maintain these levels remains unclear.
Analysts said bitcoin is now in a similar position to November 2020 when bitcoin moved with a move to $ 20,000. On December 16, bitcoin did pass $ 20,000 – a move that JPMorgan analysts attributed to Grayscale’s involvement in the market. Grayscale is owned by Digital Currency Group, the parent company of CoinDesk.
Traders ‘were able to propagate last week’s correction’, JPMorgan analysts also said, referring to the sharp drop of more than 20% in bitcoin’s value on January 10, before the opportunists partially recovered.
If bitcoin does not recover $ 40,000, “momentum signals will obviously expire by the end of March,” analysts said in the report.
At press time, bitcoin is trading at $ 37,250, which is 24% higher than 24 hours.
CHANGE (13:45 UTC, 19 January 2021): Incorrect use of a 2017 date in the fourth paragraph corrected from below.