2020-12-21 15:29 |
The crypto community has been seeing a significant surge in the price of the world’s most popular cryptocurrency, Bitcoin, in the last few months. Consequently, reaching a new all-time high of $24,209 yesterday.
Curiosities as to the factors behind Bitcoin’s tripling acceleration in price are on the rise among enthusiasts within the crypto space.
Amidst several opinions are that of an American multinational investment bank and financial services holding company, JPMorgan, that believes that the major crypto fund flows are the major determinants of Bitcoin’s outlook.
According to a Bloomberg report, strategists at JPMorgan Chase & Co say a significant slowdown of the inflows into the world’s most traded cryptocurrency fund, Grayscale Bitcoin Trust, will boost the odds of a Bitcoin price correction.
While referencing further illustrations, the strategists at JPMorgan cited Grayscale’s total assets under management have seen a speedy surge from $2 billion to a whopping tally of $13.1 Billion from December 2019 to the current time of writing. This is happening in a correlation with the upward surge in the asset’s price within the stated period.
In a monthly breakdown, the Trust Fund sees about $1 Billion worth of inflows per month, as stated in a note by strategists led by Nikolaos Panigirtzoglou.
The strategists said they are compelled to address Bitcoin as “overbought”; hence, a substantial slow down in the asset’s purchase is necessary.
“It is 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,” they said.
Moreso, they concluded while laying emphasis on their principal opinion saying;
“A major slowdown in those flows would boost the risk of a Bitcoin correction akin to the one in the second half of 2019.”
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