Photographer: Chris Ratcliffe / Bloomberg
Photographer: Chris Ratcliffe / Bloomberg
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Bitcoin retreated further from the $ 40,000 level on Monday, a decline that could predict more losses based on the latest analysis of strategists from JPMorgan Chase & Co.
An exodus of investors following the trend could hurt the cryptocurrency, unless it could soon break out more than $ 40,000, a team including Nikolaos Panigirtzoglou said. The pattern of demand for Bitcoin futures and the $ 22.9 billion Gray-scale Bitcoin Trust will help the prospects, they added.
“The inflow to the Grayscale Bitcoin Trust is likely to have to maintain its $ 100 million a day pace in the coming days and weeks to find such an outbreak,” the strategists wrote in a note Friday.
Traders looking for clues about investors’ appetite for risk are gripped by Bitcoin’s rally and a tumultuous 12% drop from a record nearly $ 42,000 on January 8th. The boom in cryptocurrency since March embodies the evil in financial markets filled with stimulus to the impact of the pandemic – as well as concerns that some of these gains may be unsustainable.
The JPMorgan strategists said that Bitcoin is in a similar position in end of November, except with $ 20,000 as the test. Flow of institutional investment in the Grayscale Trust has helped the world’s largest cryptocurrency expand its rally, they wrote.
Trend-following traders “can propagate last week’s correction” and “momentum signals will of course expire by the end of March” if Bitcoin’s price can not break more than $ 40,000.
Bitcoin fell about 4% to $ 35,100 in Tokyo on Monday at 13:14. Ether, another popular digital coin, dropped 5% to $ 1,200.
Exactly driven by the year-long near-quadruple price of Bitcoin remains obscure. Commentators have mentioned day traders, wealthy buyers, hedge funds, companies and even signs of interest from long-term investors such as insurers.
Proponents of Bitcoin argue that it is aging as a hedge against dollar weakness and the possibility of faster inflation in a recovering world economy. Others say that its hallmark is still speculative upswings, followed by busts.
– With help by Mark Cranfield
(Updates with the latest price movements from the first paragraph.)