JPMorgan Believes that Bitcoin is Overbought

JPMorgan Believes that Bitcoin is Overbought

The finance giant, JPMorgan Chase, recently revealed that the only thing that could be contributing to Bitcoin’s price surge at the moment is the interest of institutional investors. The same sentiments were echoed by Nikolaos Panigirtzoglou as well as his team of strategists at Bloomberg. They added to forecasts that were made regarding the role of institutional players where the future of Bitcoin (BTC) is concerned. According to JPMorgan, the only way momentum will be maintained by the large-scale inflows of the month would be to continue with it. If this doesn’t happen, there will be a massive price correction that’s going to shake the whole industry.

The addition of institutional players is considered to be the reason behind the recent bull-run of the pioneer cryptocurrency and its ATH. These investors purchase BTC via OTC (Over-the-counter) trades, which immediately use up the entire available supply. This results in a liquidity crisis for the cryptocurrency. According to analysts, this would only increase over time and some went as far as to say that this cycle could end up fueling Bitcoin’s bull-run for an indefinite period of time. However, it seems that JPMorgan is not convinced of this entirely and said that buyers should continue purchasing Bitcoin, or else it would see a large-scale correction. 

Grayscale Investments, which also has a total of $13.1 billion crypto assets under management, also had an opinion about this Bitcoin rally. The company said that the sheer scale of the inflows is simply too massive to give momentum traders the opportunity to unwind. It said that this would result in a sustained negative price dynamic. Nonetheless, the leading cryptocurrency still remains near its ‘overbought’ ranges, as far as its current price levels are concerned at around $14,000. As of now, the RSI, or the relative price index, is a little higher than 70% and it came back down below its threshold with a dip in price on Monday. 

Along with others, Panigirtzoglu had already stated in the past that a cash injection could prove to be advantageous for Bitcoin, which needs to be around $600 billion and can be contributed by institutional investors. This came after the insurance giant, MassMutual had revealed that they had also allocated around $100 million to crypto assets. Keeping in mind the warnings given previously, it was reiterated that Bitcoin could end up usurping gold’s position eventually. This was supported by the latest findings as well, with a new trend being highlighted by Grayscale. 

It is possible for people to get exposure to Bitcoin by purchasing one unit of Grayscale and selling three units of SPDR Gold Trust. According to researchers, a structural flow headwind may result in negative impacts on gold, if this medium to long-term thesis turns out to be true. Gold and Bitcoin’s correlation levels have also decreased significantly since Bitcoin began its rally and reached new all-time highs. As far as gold is concerned, the precious metal saw a rejection on Monday at a value of $19,000, but was able to make a modest recovery.

Jerry Dedmon

Author: Jerry Dedmon

Jerry Dedmon is a new writer on Cryptocoin Stock Exchange, his articles are cryptocurrency news, analysis and blockchain news based. We recommend tuning in for Jerry's daily posts as they are always a great and interesting read.

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