JPMorgan: Bitcoin Traders Likely to Unwind Futures Positions

Published January 25, 2021 | Updated January 25, 2021

JPMorgan: Bitcoin Traders Likely to Unwind Futures Positions

Bitcoin trades are more likely to unwind their futures position citing a slowdown in Bitcoin institutional participation, says JPMorgan!

Just as Bitcoin (BTC) continues to face downward pressure over the last week, the institutional interest also seems to wane down at the moment. JPMorgan analysts think that Bitcoin price return to $40,000 seems to be doubtful as to the institutional inflows to the biggest Bitcoin fund – Grayscale Bitcoin Trust (GBTC) – seem to be slowing down.

JPMorgan strategists led by Nikolaos Panigirtzoglou noted that the GBTC four-week rolling average “appears to have peaked”. As per the last Grayscale update, the net assets under management (AUM) of its Bitcoin Trust has dropped to $20.4 billion.

JPMorgan states that fund slid is faster at 22% whereas the BTC price has dropped 17% during the same period.

Courtesy: Bloomberg

The analysts also added that as institutional inflows slow down, Bitcoin traders are likely to unwind their positions. The strategists wrote:

“At the moment, the institutional flow impulse behind the Grayscale Bitcoin Trust is not strong enough for Bitcoin to break out above $40,000″. They added: the “risk is that momentum traders will continue to unwind Bitcoin futures positions. The near-term balance of risks is still skewed to the downside”.

Recently, Grayscale has, however, resumed back to Bitcoin buying. As per data on Bybt, the Grayscale Bitcoin Trust (GBTC) has purchased more than 40K Bitcoin since January 14, 2021, pouring more than $1.5 billion.

Institutions Are Scooping Whale Bitcoins

In another analysis, long term Bitcoin holders called “whales” and miners have been losing their supplies to institutions over the last year. Adam James with OKEx Insights told Bloomberg:

“Old-school Bitcoiners sold some of their old bags to new institutional buyers with extremely large new bags to fill”.

Below is the chart that clearly shows how Bitcoin (BTC) holding among Asian whales and miners is dropping since March 2020 and how U.S.-based institutions have accumulated during the same period.

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The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
Bhushan Akolkar 421 Articles
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
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