JPMorgan Warns of Collapse in Bitcoin Momentum Signals After Recent Sell-off
Much like crypto traders, JPMorgan strategists see a deeper slump incoming with momentum decay advanced and lack of strong flows into Bitcoin funds.
After the sell-off over the weekend that took us to nearly $50,000, Bitcoin price has now taken to chopping.
For now, the BTC price is ranging between $53k and $58k, with the larger range of $50k to $60k.
Amidst this price action, JPMorgan strategists are calling for a momentum collapse in the event of lack of movement or interest.
The weekly report by the bank strategists led by Nikolaos Panigirtzoglou notes that if BTC price is unable to break above $60,000 soon, momentum signals will collapse.
JPMorgan report points out that the last few times such negative price action was witnessed in Bitcoin, the market recorded deeper slumps.
Its likely traders, including crypto funds and Commodity Trading Advisors (CTAs), were at least partly involved in the buildup of long Bitcoin futures in recent weeks and also the unwind in the past days, they wrote.
“Over the past few days, Bitcoin futures markets experienced a steep liquidation in a similar fashion to the middle of last February, middle of last January, or the end of last November,” the strategists said.
“Momentum signals will naturally decay from here for several months, given their still-elevated level.”
Crypto traders, as we reported, are also expecting Bitcoin to have yet another sell-off which means going back to $50k and bounce or fall even further to about $45k. Another drop in BTC price followed by consolidation would then bring the perfect opportunity for altcoins to run higher, especially Ether.
Though Ether (ETH) is up 215% YTD compared to Bitcoin’s 90% performance, Ether’s ATH at $2,550 is only 80% higher than the 2017 peak of about $1,420, unlike Bitcoin’s 225%. So, Bitcoin ranging would give Ether a chance to catch up, for which some are calling for a five-figure moon target this cycle. ETH 1.48% Ethereum / USD ETHUSD $ 3,578.48
$52.961.48% Volume 20.06 b Change $52.96 Open $3,578.48 Circulating 117.55 m Market Cap 420.65 b 17 min Crypto’s Self-Policing Unveils Insider Trading at $1.5 Bln Valued NFT Marketplace, OpenSea 2 h $1.5 Trillion Asset Manager Franklin Templeton Eyes Crypto With Latest Filing 3 h AMC Entertainment to Accept Bitcoin, Ether, and other Cryptocurrencies as Payment
JPMorgan strategists further pointed out that in the previous instances, the overall flow impulse was strong enough to break out above the key thresholds quickly.
“Whether we see a repeat of those previous episodes in the current conjuncture remains to be seen.”
The likelihood that it will happen again seems lower because not only momentum decay seems more advanced and thus more difficult to reverse but flows into Bitcoin funds also appear weak, they said.