JPMorgan analysts see the $ 40,000 bitcoin price as an important battlefield that bullish traders must recapture in order for the meteoric rise in the cryptocurrency to continue.
According to a report by Bloomberg on Monday, the cryptocurrency could see another downtrend, provided the Bitcoin price doesn’t go above $ 40,000.
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 is likely to be triggered by a bevy of traders exiting the market due to a possible change in short-term trend and a lack of further institutional flows, according to the report.
“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 on Friday in a statement to investors 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, but analysts at JPMorgan said Bitcoin is in a similar position to November 2020 when Bitcoin hit a new record high but didn’t top $ 20,000.
Three years later, on December 16, 2020, Bitcoin finally surpassed $ 20,000 – 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 propagate last week’s correction,” JPMorgan analysts also said, citing Bitcoin’s sharp drop of over 20% on January 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.