Photographer: Chris Ratcliffe / Bloomberg
Photographer: Chris Ratcliffe / Bloomberg
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Bitcoin retreated further from the USD 40,000 level on Monday, a decline that could predict more losses based on the latest analysis from strategists at JPMorgan Chase & Co.
The cryptocurrency could be hurt by an exodus of trend following investors unless it can “break out” above $ 40,000 soon, a team including Nikolaos Panigirtzoglou said. The pattern of the demand for Bitcoin futures and the $ 22.9 billion Grayscale Bitcoin Trust will help determine the outlook, they added.
“The flow to the Grayscale Bitcoin Trust would likely need to maintain the pace of $ 100 million a day for the next few days and weeks for such an outbreak to occur,” the strategists wrote in a note Friday.
Traders looking for clues to investors’ risk appetite have been gripped by Bitcoin’s stunning rally and turbulent 12% drop from a record high of nearly $ 42,000 on January 8. the pandemic – as well as concerns that some of these gains could turn out to be unsustainable.
The JPMorgan strategists said Bitcoin was in a similar position in in late November, except with $ 20,000 as a test. Flows of institutional investment in the Grayscale trust helped the world’s largest cryptocurrency expand its rally, they wrote.
Traders following trend “could propagate last week’s correction” and “momentum signals will naturally decline from here until the end of March” if the price of Bitcoin does not rise above $ 40,000, they said.
Bitcoin fell about 4% to $ 35,100 on Monday from 1:14 PM in Tokyo. Ether, another popular digital currency, was down 5% to $ 1,200.
Exactly what caused Bitcoin’s nearly quadrupling for years to come remains murky. Commenters have cited day traders, high net worth buyers, hedge funds, companies, and even signs of interest from long-term investors such as insurers.
Bitcoin proponents argue that it is maturing as a hedge against dollar weakness and the possibility of faster inflation in a recovering global economy. Others say its hallmark remains a speculative boom, followed by failures.
– With the help of Mark Cranfield
(Updates with the latest price movements from the first paragraph.)