JPMorgan analysts see $ 40,000 as the main battleground of bitcoin that bullish investors need to retake for the meteoric rise of the cryptocurrency to continue.
According to a report by Bloomberg on Monday, unless the price of bitcoin can exceed $ 40,000, the cryptocurrency could experience an additional drop.
According to JPMorgan strategists and Nikolaos Panigirtzoglou, its head of global market strategy, greater input from the multi-billion dollar bitcoin fund owned by digital asset manager Grayscale Investments is needed to sustain prices above that key level. The analysis also took into account the demand for bitcoin futures.
The bearish outlook would likely be triggered by a flock of traders exiting the market due to a possible change in the short-term trend and the lack of further institutional flows, according to the report.
“The flow to the Bitcoin Trust in shades of gray would likely need to sustain its $ 100 million daily pace for the next few days and weeks for this disruption to occur,” strategists said in a note to investors on Friday referring to a price break above $ 40,000.
The grayscale announced on Saturday that it had raised its biggest single-day increase in the company’s existence, adding more than $ 700 million to its family of products, including bitcoin.
How long the digital asset manager can sustain these levels is still unclear.
Analysts said bitcoin is now in a position similar to November 2020, when bitcoin was playing with a move to $ 20,000. On December 16, bitcoin exceeded $ 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 “can propagate last week’s correction,” analysts at JPMorgan said, referring to the sharp drop of more than 20% in bitcoin’s value on January 10, before a partial recovery brought on by opportunists.
If bitcoin fails to regain $ 40,000, “the momentum signals will naturally decline from here until the end of March,” analysts said in the report.
So far, bitcoin was trading at $ 37,250, up 2% in 24 hours.
TO EDIT (13:45 UTC, 19 January 2021): Corrected misuse of a 2017 date in the fourth paragraph at the bottom.