In Flows To Grayscale Slowing Casts Doubt On BTC Return To $40,000

In a note published on Friday, JPMorgan strategists noted that the pace of flows into the $20 billion Grayscale Bitcoin Trust “appears to have peaked” based on four-week rolling averages, leading to a belief that Bitcoin will struggle to break out above $40,000 in the near-term.

“At the moment, the institutional flow impulse behind the Grayscale Bitcoin Trust is not strong enough for BTC to break out above $40,000.”  The strategists noted, while also adding that the “risk is that momentum traders will continue to unwind Bitcoin futures positions.”

The fund dropped by 22% over the past two weeks. Eclipsing that of Bitcoin which fell 17% over the same period.

Bitcoin reached a peak of nearly $42,000 on January 8. Proponents of Bitcoin believe institutional interest helped to boost Bitcoin’s use as a hedge against dollar weakness and inflation. Skeptics on the other hand, believe it to be just the latest speculative bubble. Much like the one in 2017 which preceded a massive collapse.

Recently, Bitcoin’s price has been volatile, trading in the mid-$30,000 range, but it has still gained by 270% over the past year.

Meanwhile, Adam James of OKEx Insights found that some Bitcoin “whales” and miners sold to institutional investors during the rally in 2020. As the average age of coins traded have risen stayed elevated since October.