According to JPMorgan Chase & Co., Bitcoin enthusiasts who rely on Bitcoin to recover above the $ 40,000 level are facing a challenge due to the lack of demand for the largest fund that tracks the digital asset.
The pace of flows reaches $ 20 billion Grayscale Bitcoin confidence “seems to have peaked” based on four-week rotating averages, JPMorgan strategists led by Nikolaos Panigirtzoglou said in a note on Friday. The fund fell 22% in the last two weeks to January 22, surpassing a 17% drop in Bitcoin in the same period.
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“At the moment, the institutional flow momentum behind Bitcoin’s grayscale confidence is not strong enough for Bitcoin to surpass $ 40,000,” strategists said. They added that the “risk is that momentum traders will continue to develop future Bitcoin positions.”
The slow rise in Bitcoin lost momentum after the largest cryptocurrency hit a high of nearly $ 42,000 on January 8th. Proponents argue that institutional interest has helped bolster the use of Bitcoin as a hedge against dollar weakness and inflation, while skeptics maintain that the latest wave is another bubble speculation, similar to the mania of the 2017 that preceded a rapid collapse.
“The short-term risk balance is still shrinking,” JPMorgan strategists said.
In an independent analysis, Adam James with OKEx Insights found at least some long-term Bitcoin holders – the so-called “whales” – and the miners probably sold to institutional investors during the 2020 rally, as the Middle Ages of traded currencies increased in October and has since remained high.
“Old-school Bitcoiners sold some of their old bags to new institutional buyers with extremely large new bags to fill,” James wrote. OKEx Insights is affiliated with the OKEx cryptographic exchange.
Bitcoin advanced approximately 2% to $ 32,700 as of 11:43 a.m. in Tokyo on Monday. The digital currency has continued to gain about 260% over the past year, despite having lost about $ 10,000 over this month’s all-time high.