Bitcoin Price Must Pass $ 40K to Stop Exodus Traders: JPMorgan Analysts

JPMorgan analysts see $ 40,000 as a key bitcoin battlefield that bullish traders need to recapture for the cryptocurrency’s meteoric rise.

According to a report by Bloomberg on Monday, unless the price of bitcoin can break out above $ 40,000 the cryptocurrency could see further downside.

The multi-billion dollar bitcoin trust owned by digital asset manager Grayscale Investments needs more input to maintain prices above that key level, according to JPMorgan strategists and Nikolaos Panigirtzoglou, its head of global market strategy . The analysis also considered the demand for bitcoin futures.

The bearish outlook would likely be triggered by a bevy of traders leaving the market on a potential short-term trend change and a lack of further institutional flows, according to the report.

“The flow to the Grayscale Bitcoin Trust would probably need to maintain its $ 100 million a day pace over the coming days and weeks for such a breach to occur,” strategists said in a note to investors Friday referring to a price cut above $ 40,000.

Grayscale announced on Saturday that it has raised its largest one-day raise in the company’s existence, adding over $ 700 million to its family of products including bitcoin.

How long the digital asset manager can maintain those levels remains unclear.

Analysts said bitcoin is now in a similar position to November 2020 when bitcoin was distracting with a move toward $ 20,000. On December 16, bitcoin passed $ 20,000 – a move that the JPMorgan analysts attributed to Grayscale’s involvement in the market. Grayscale is owned by Digital Currency Group, the parent company of CoinDesk.

Traders could “multiply last week’s correction,” JPMorgan analysts also said, referring to the sharp 20% drop in the value of bitcoin on January 10, before a partisan-induced recovery.

If bitcoin fails to regain $ 40,000, “momentum signals will naturally disintegrate from here until the end of March,” analysts said in the report.

At press time, bitcoin was trading at $ 37,250, up 2% over 24 hours.

EDIT (13:45 UTC, January 19 2021): Corrected incorrect usage of date 2017 in the fourth paragraph from the bottom.