According to analysts at JPMorgan Chase, the price of Bitcoin is rising almost exclusively due to the activities of large institutions
It’s almost exclusively the activities of institutional investors that are driving up the price of Bitcoin (BTC), claims a new report from JPMorgan Chase.
In comments on Dec. 18, reported by Bloomberg, the company’s analysts led by Nikolaos Panigirtzoglou made some predictions about the role of institutions in Bitcoin’s future.
JPMorgan: BTC price will fall as soon as institutions stop buying
According to JPMorgan, the large-scale inflows seen this month will need to continue to avoid a price correction.
As reported by Cointelegraph, it appears that large institutions are buying all available supply via over-the-counter trades, thus driving up the price of Bitcoin. Some have called this situation a „liquidity crisis,“ which is bound to worsen over time; one analyst even predicted that as long as institutions continue to buy, Bitcoin’s bull run will not stop.
More negative is the opinion of JPMorgan: according to the US bank, the price of BTC will collapse as soon as large institutions stop buying.
As for Grayscale, which currently manages crypto assets worth more than $13.1 billion, JPMorgan analysts argue that inflows to the fund „are too large to allow position closures by a few momentum traders to create a sustained negative effect on the price.“
Is bitcoin slowly replacing gold?
Previously, Panigirtzoglou and other analysts had said that Bitcoin could benefit from a $600 billion cash injection from large institutions after insurance giant MassMutual allocated $100 million in the asset.
Gold vs. BTC/USD.
Many believe that in time gold will be supplanted by Bitcoin, and a recent trend seems to support this. In fact, it appears that for every unit of Grayscale Bitcoin Trust purchased, three units of SPDR Gold Trust are sold.
„If this medium- to long-term thesis proves to be correct, the gold price would suffer from a strong structural headwind in the coming years,“ explain JPMorgan analysts.
Correlation of Bitcoin with USD, Gold, VIX, S&P500.
The correlation between gold and Bitcoin has continued to decline since October, when the cryptocurrency’s price began to rise. On Monday, gold failed to cross the $1,900 wall after a modest recovery from levels below $1,800.