Cryptocurrency enthusiasts who expect Bitcoin to bounce back above the $ 40,000 level face a challenge due to faltering demand for the largest fund tracking digital assets, according to JPMorgan Chase & Co.
The rate of is flowing into the $ 20 billion Grayscale Bitcoin Trust “appears to have peaked” based on four-week moving averages, JPMorgan strategists led by Nikolaos Panigirtzoglou said in a note Friday. The fund fell 22% in the past two weeks through January 22, surpassing a 17% drop in Bitcoin over the same period.
Read: The 40% premium of the largest Crypto fund evaporates during the meltdown
“Right now, the institutional power impetus behind the Grayscale Bitcoin Trust is not strong enough for Bitcoin to break above $ 40,000,” the strategists said. They added that the “risk is that momentum traders will continue to settle Bitcoin futures positions.”
Bitcoin’s red-hot rally lost momentum after the largest cryptocurrency peaked at nearly $ 42,000 on Jan. 8. bubble, similar to the 2017 mania that preceded a rapid collapse.
“The short-term risk balance is still down,” said JPMorgan strategists.
In a separate analysis, Adam James of OKEx Insights found at least some long-term Bitcoin holders – the so-called ‘whales’ – and miners likely to be sold to institutional investors during the 2020 rally, given the average age of the traded coins rose from the start. in October and has remained high ever since.
“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 crypto exchange OKEx.
Bitcoin was up about 2% to $ 32,700 as of 11:43 am Monday in Tokyo. The digital currency still posted gains of about 260% over the past year, despite a loss of about $ 10,000 from this month’s high.