Xiao Mo: Unless Bitcoin quickly rebounds above $40,000, it may fall further
The price of Bitcoin has risen sharply in the past year and hit an all-time high of nearly $42,000 on January 8, but has since plunged 11%. JPMorgan Chase pointed out that unless Bitcoin quickly rebounds above $40,000, it may face the risk of further decline.
JPMorgan Chase strategists, including Nikolaos Panigirtzoglou, said that a large number of trend-tracking investors may withdraw or hurt Bitcoin unless the cryptocurrency can “break through” the $40,000 price level. They stated that demand for Bitcoin futures and the largest cryptocurrency trading fund, the Grayscale Bitcoin Trust, will provide clues about the outlook for Bitcoin prices.
“The funds flowing into the Grayscale Bitcoin Trust Fund may need to maintain a daily rate of 100 million U.S. dollars in the next few days or weeks before such a price breakthrough can occur,” Xiaomo strategists said on Friday (January 15) ) Wrote in a report released.
Bitcoin may fall back below the 50-day moving average
JPMorgan Chase’s strategists said that Bitcoin was in a similar situation at the end of November, except that it was tested at $20,000. They wrote that US$22.9 billion in institutional investment flowed into the Grayscale Trust Fund, helping the world’s largest cryptocurrency continue its rally.
They stated that if the price of Bitcoin fails to exceed $40,000, trend-following traders “may contribute to the pullback in the past week”, “from now to the end of March, the momentum signal will naturally weaken.”
Bitcoin’s surge came in the context of the new coronavirus pandemic. During the epidemic, governments around the world have introduced large-scale stimulus measures to help troubled economies. This has exacerbated some investors’ concerns about inflation and prompted them to turn to assets such as Bitcoin to hedge against inflation.
Commentators believe that investors seeking higher returns in the global low interest rate environment, the entry of institutional investors and large companies, the fear of loss by retail investors, and the limited supply of Bitcoin are all possible reasons for the four-fold increase in the price of Bitcoin in the past year. .
The market’s views on Bitcoin are highly divided. Proponents believe that as the global economy recovers, Bitcoin is becoming more and more mature as a tool to hedge against the weakening of the dollar and accelerating inflation. Others say that the typical feature of Bitcoin is still speculative prosperity, and the bubble will eventually burst.
