JPMorgan Remains ‘Bearish’ as it Refuses to “Abandon Negative Outlook,” Calling for $25k
Despite the price of Bitcoin sliding under $29,000 earlier this week, it continues to trade in the $30k-$40k range.
While money continues to flow into the market and China’s crackdown on crypto mining and trading seems to be coming to an end, especially with less than a week left for the politically sensitive 100th anniversary of the ruling communist party on July 1st, JPMorgan Chase & Co. have found another headwind for Bitcoin price.
According to JPMorgan strategists led by Nikolaos Panigirtzoglou, the selling of Grayscale Bitcoin Trust (GBTC) shares between June and July is likely to be a fresh source of pressure on the leading cryptocurrency.
one thing we haven't discussed yet – the grayscale $GBTC unlock schedule is looking really crusty
from mid-april to mid-june, 139,000 bitcoin worth of shares have unlocked. there's another 140,000 bitcoin worth of shares that will unlock through the end of july
— Meltem Demir◎rs (@Melt_Dem) June 23, 2021
GBTC shares have been unlocked and dumped on the market in increasing numbers since May and June, which will continue into July.
With this unlocking of GBTC shares also coming to an end, the market is hopeful of a big upwards move in the prices of the crypto asset.
“The best part is after the selling/peak fear is done no one has any reason to ever sell bitcoin again and we unironically may go to infinity,” said Loomdart back in April.
GBTC has actually been trading at a discount since the end of February, and this has resulted in no inflows.
The discount on GBTC, which was as much as 21.23% in mid-May, has now shrunk to 6.68% as of writing. “The GBTC discount shrinking is a clear indicator this is now not as impactful as it was. Markets are buyers and sellers. The sellers are running dry,” said Loomdart.
This is my main btc bull thesis.
Most people who own $BTC will simply never sell. This means over time it gets more scarce.
The issue is when we finally do get periods of people selling, the market is simply not used to it (i.e gbtc selling) and reacts very badly https://t.co/RISIg2LPRt
— 🐵👑 (@loomdart) May 31, 2021
The market has normalized, with prices more than halved; what’s needed now is flows that are still strong into the private market but not directly into cryptocurrencies. Trader and economist Alex Kruger noted,
“It is all about flows. And flows are mostly driven by sentiment. Funding rates are the best reflection of sentiment there is. Implied funding rates marked the top.”
Interestingly, the fourth-largest Bitcoin whale wallet has started buying the cryptocurrency again, adding 4,106 BTC during the latest sell-off after selling 1,500 BTC at $40k two weeks ago.
This unknown whale first started buying Bitcoin in 2019 and now owns 115k BTC, worth about $4 billion.
However, JPMorgan remains bearish and expects, even more, sell-off and breakdown of prices. JPMorgan’s strategists said,
“Despite this week’s correction, we are reluctant to abandon our negative outlook for Bitcoin and crypto markets more generally.”
“Despite some improvement, our signals remain overall bearish.”
For JPMorgan strategists, Bitcoins’ fair value, based on a comparison of its volatility versus gold, is in the $23,000 to $35,000 range in the medium term.
“It would still take price declines to the $25,000 level before longer-term momentum would signal capitulation.”
However, $30k is strong support, and in line with crypto market sentiment, DoubleLine Capital LP Chief Executive Officer Jeffrey Gundlach also said on Twitter Thursday that “it’s a big deal” if Bitcoin closes below $30,000.