According to JPMorgan Chase strategists led by Nikolaos Panigirtzoglou, a Bitcoin price correction could occur if the flow to Grayscale’s Bitcoin Trust (GBTC) slows significantly.
Grayscale Bitcoin Trust product can have an impact on the price
According to Bloomberg, strategists wrote last week that GBTC’s managed assets rose from $ 2 billion to over $ 1.1 billion in early December 2019, and the price of BTC rose to a new all-time high of over $ 24,000.
Analysts said if inflows to the fund, currently about $ 1 billion per month, drop significantly, its price could face a correction similar to that seen in the second half of last year.
With #Bitcoin prices blasting past $20,000 the Bitcoin Volatility Index (BVIN) has risen sharply as option traders expect high volatility in the coming 30 days. https://t.co/hDqnufRtaq pic.twitter.com/UCVTdG0i9k
— CryptoCompare (@CryptoCompare) December 17, 2020
Analysts describe Bitcoin as under “overbought”, stating that flows to GBTC are “too large to allow it to relax to create constant negative price dynamics by momentum traders.” Last year, the Bitcoin price had dropped from over $ 13,000 at the end of the year to just over $ 7,000.
Did speculation take over the market?
While some believe that institutional investor demand will continue to raise the price of the cryptocurrency as it is seen as a hedge against the weakness of the dollar and potential currency depreciation and inflation, others say speculation has taken over the market.
Several publicly traded companies, including MicroStrategy and Square, have acquired millions of BTC. Massachusetts Mutual Life Insurance, which has been operating for 169 years, announced that it purchased $ 100 million worth of BTC for its general investment fund, while Ruffer Investment claimed to have $ 744 million in BTC investment.
This week, Tesla’s CEO Elon Musk asked MicroStrategy CEO Michael Saylor if large transactions are possible to buy Bitcoins. The speech came right after Saylor told Musk that his firm “purchased more than $ 1.3 billion in BTC” to be used as MicroStrategy’s main treasury reserve asset.