Bitcoin Expected to Hit $100k Between Q3 & Q4; $50k Looks Challenging in the Short-Term
Over the weekend, Bitcoin pushed its way to about $33,800. It’s been a fortnight since the leading digital currency had a pullback and started ranging after its all-time high at $42,000.
JPMorgan Chase’s strategists suggests Bitcoin bouncing back above the $40k level now faces a challenge because of the faltering demand for Grayscale Bitcoin Trust (GBTC).
The pace of flows into the world’s largest digital asset fund “appears to have peaked” based on four-week rolling averages, wrote JPMorgan strategists led by Nikolaos Panigirtzoglou in a note on Friday.
“At the moment, the institutional flow impulse behind the Grayscale Bitcoin Trust is not strong enough for Bitcoin to break out above $40,000,” the strategists added; the “risk is that momentum traders will continue to unwind Bitcoin futures positions.”
In January, it was about the middle of the month when Grayscale opened its funds for new investors after nearly a month of no activity. GBTC actually bought 39,540 BTC worth $1.3 bln, which occurred in just seven days, as per data source Bybt. Meanwhile, only 22,500 BTC were mined in the entire month so far.
However, for JPMorgan strategists’ “the near-term balance of risks is still skewed to the downside.”
But the crypto market has long been expecting this downtrend, which is perceived as a healthy correction before the market could go higher for new ATHs and a trillion-dollar market cap.
According to analyst PlanB, $100k per BTC could be seen somewhere between the Q2 and Q3 of 2021. From here, the analyst expects Bitcoin to find its equilibrium in Q4, which is to be seen if it would find it around $100k, which would put it in a similar cycle to the 2017 bull market or at $288,000, resembling the 2013 market cycle.
— PlanB (@100trillionUSD) January 24, 2021
When it comes to the short-term, Bitcoin could only go down to $28,975 last week, while the market was expecting a drop to $25,000 to $27,500. Trader and economist Alex Kruger, while sharing his BTC roadmap, said,
“Traded $28.8 instead of $27.5. Now back in the range. It did bounce back FAST. Expect to retest the high within 2 weeks. Thinking getting to 50K will be more challenging than I thought, as BTC price action from the bounce has been relatively weak.”
The trader is now bullish from here given that funding has gone flat between 0.01% and 0.06%, the dollar has topped to now be around 90, and the macro narrative is supportive as well.
Not to mention, the GBTC premium went down to 2.77% last week from over 40% a month before. Vanishing premium suggests investors are dumping their position as WallachBeth Capital’s Mohit Bajaj explained,
“When there is a big move to the downside, bids tend to drop, and that premium ends up collapsing because investors are trying to get out of positions… Because of this, the arb band tightens because arbitragers are selling their hedge faster than they can unload the GBTC they are buying back in the marketplace.”
The combination of a drop in BTC price and a slew of GBTC shares exiting their six-month lockup period could be behind this premium plunge along with the growing competition. Today, the GBTC premium is seeing an uptick to 16.5%.
Overall, in the short term, while all the lingering Tether FUD, fears of exhaustion in institutional demand, and miners accelerating their dump remains bearish factors, the bullish scenario is offered by monster options expiry and FOMC meeting on Wednesday.