JPMorgan analysts see $ 40,000 as an important battlefield for bitcoin that bullish traders must recapture in order for the meteoric rise of the cryptocurrency to continue.
According to a report from Bloomberg on Monday, if bitcoin price fails to break above $ 40,000, the cryptocurrency could see another downward trend.
According to strategists at JPMorgan and head of global market strategy Nikolaos Panigirtzoglou, a greater contribution from the multi-billion dollar Bitcoin trust of digital asset manager Grayscale Investments is required to keep prices above this key level. The analysis also took into account the demand for Bitcoin futures.
The bearish outlook would likely be triggered by a bevy of traders leaving the market due to a possible change in the short-term trend and a lack of further institutional flows, the report said.
“The inflow into the Grayscale Bitcoin Trust would likely have to maintain its pace of $ 100 million per day in the coming days and weeks for such an outbreak to occur,” strategists said in a statement to investors on Friday indicated a price violation of over $ 40,000.
Grayscale announced on Saturday that it had made its largest one-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 maintain these levels remains unclear.
The analysts said Bitcoin is now in a similar position as it was in November 2020 when Bitcoin played with a move towards $ 20,000. Bitcoin surpassed $ 20,000 on December 16, a move JPMorgan analysts attributed to Grayscale’s involvement in the market. Grayscale is owned by the Digital Currency Group, the parent company of CoinDesk.
Traders “could spread last week’s correction,” JPMorgan analysts also said, citing Bitcoin’s sharp drop of over 20% on Jan. 10 before a partial recovery was sparked by opportunists.
If Bitcoin does not get $ 40,000 back, “the momentum signals from here will of course wane by the end of March,” the analysts said in the report.
At press time, Bitcoin was trading at $ 37,250, up 2% in 24 hours.
TO EDIT (13:45 UTC, January 19, 2021): Corrected incorrect use of a date for 2017 in the fourth paragraph from below.