Home » Bitcoin, JP Morgan remains bearish and presents fair value, while investors questioned speak of ‘rat poison’

Bitcoin, JP Morgan remains bearish and presents fair value, while investors questioned speak of ‘rat poison’

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JP Morgan remains bearish on Bitcoin and identifies what, in his opinion, is the fair value of the world‘s number one cryptocurrency. Bitcoin prices today jumped up to + 5% above the $ 34,000 mark following the announcement of El Salvador President Nayib Bukele, who announced that the digital currency will become legal tender in the country, starting September 7th. Prices now drop more than 3.5% to approximately $ 32,690.

Returning to JP Morgan, the strategists led by Nikolaos Panigirtzoglou assign Bitcoin a fair value of between $ 23,000 and $ 35,000 in the medium term, based on the comparison of its volatility against gold.

“Despite some improvements, our signals remain bearish overall – commented the strategists,

The reasons are many “but the sale of Grayscale Bitcoin Trust (GBTC) shares purchased in January after the six-month lockup period, could emerge as an additional obstacle for Bitcoin, in the months of June and July”.

It should be noted that the Grayscale Bitcoin Trust is an ETF that JP Morgan had already talked about a few months ago always in relation to Bitcoin: it is the most important tool that institutional investors have available to buy up Bitcoin.

This fund is headed by the Grayscale Bitcoin Trust which currently manages $ 21.9 billion worth of assets. This trust allows qualified investors to directly buy shares from Grayscale: after six months, investors can then sell, with the expiry of the lockup period, the same shares, on the markets, with the GBTC ticker.

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Now, both June and July, lockups on GBTC shares that were sold in late 2020 and early 2021 expire, and JP Morgan expects many investors who bought the stocks six months ago will begin to sell off.

Thus JP Morgan:

“We remind our readers that in December and January we saw the highest monthly flows on the GBTC, at $ 2 billion and $ 1.7 billion respectively.” But, “with the expiry of the lockup periods in June and July, these investors are likely to decide to sell at least part of the GBTC securities, thus exerting downward pressure on GBTC prices and, more generally, on the Bitcoin markets”.

To better understand JP Morgan’s bearish position, just think that, as a recent Marketwatch article indicated, the asset with the highest correlation with Bitcoin is the Grayscale Bitcoin Trust GBTC.
Given the risk, the strategists of the American banking giant therefore believe that the bearish phase of the world‘s number one cryptocurrency is not over.

JP Morgan also put itself in the spotlight for a survey it launched on Bitcoin at its 24th macro, quantitative and derivatives conference on 11 June.

The survey found that 1 in three investors consider cryptocurrency “rat poison”, while a percentage of 16% defines it “a fad”.

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