According to the Bloomberg report, strategists at JPMorgan Chase believe that the odds of a Bitcoin correction would increase if the flows into the world’s largest traded cryptocurrency fund slow significantly. The Grayscale Bitcoin Trust’s assets under management have climbed to $13.1 billion from $2 billion at the start of December 2019, amid a tripling in bitcoin’s price so far this year. Inflows into the fund are running at about $1 billion per month, JPMorgan strategists led by Nikolaos Panigirtzoglou wrote in a note Friday.
A slowdown in the flows would boost the risk of a Bitcoin correction.
The strategists said that while it’s hard to avoid describing Bitcoin as “overbought,” the flows into the trust “are too big to allow any position unwinding by momentum traders to create sustained negative price dynamics.” A major slowdown in those flows would boost the risk of a Bitcoin correction akin to the one in the second half of 2019, they said. The price of bitcoin reached an all-time high of $24,291.38 on Sunday.
Bitcoin continues to soar to new highs.
At the time of writing, BTC is changing hands at just below the $24,000 mark. The cryptocurrency’s backers argue it’s gaining ground among longer-term investors as a hedge against dollar weakness and risks such as higher inflation. Others claim an unsustainable speculative fervor, exacerbated by trend-following quant funds, lies behind much of the rally in Bitcoin and other digital assets. Last year the leading cryptocurrency slipped 44% from a peak in late June to $7,158 by the end of that year, though it still almost doubled for 2019 as a whole. There are signs of growing corporate and institutional interest in the cryptocurrency despite its famed volatility.
