The previous couple of occasions Nikolaos Panigirtzoglou witnessed such destructive worth motion in Bitcoin, consumers returned in time to forestall deeper slumps. This time, the JPMorgan Chase & Co. strategist is anxious.
If the biggest cryptocurrency isn’t capable of break again above $60,000 quickly, momentum alerts will collapse, strategists led by Panigirtzoglou wrote in a notice Tuesday. It’s doubtless merchants together with Commodity Buying and selling Advisers (CTAs) and crypto funds have been a minimum of partly behind the buildup of lengthy Bitcoin futures in current weeks, in addition to the unwind in previous days, they stated.
“Over the previous few days Bitcoin futures markets skilled a steep liquidation in a similar way to the center of last February, center of last January or the top of final November,” the strategists stated. “Momentum alerts will naturally decay from right here for a number of months, given their nonetheless elevated degree.”
In these three earlier cases, the general move impulse was sturdy sufficient to permit Bitcoin to shortly escape above the important thing thresholds, yielding additional buildups in place by momentum merchants, JPMorgan famous.
“Whether or not we see a repeat of these earlier episodes within the present conjuncture stays to be seen,” the strategists stated. The probability it’s going to occur once more appears decrease as a result of momentum decay appears extra superior and thus tougher to reverse, they added. Flows into Bitcoin funds additionally seem weak, they stated.
Bitcoin rose as excessive as $64,870 across the time of the Nasdaq listing of Coinbase World Inc., however has retreated again to $55,000. The cryptocurrency continues to be up about 90% year-to-date.
(Updates costs in final paragraph.)