Coinfomania: Where blockchain and cryptos live.

JPMorgan: Grayscale Inflows Make a Bitcoin Correction Unlikely Right Now

Bitcoin has been experiencing an upward surge in its price over the last few months, recently reaching a new all-time high of $24,291.38. 

Some bitcoin enthusiasts argue that its upward trend is fostered by the influx of long-term investors into the crypto space, seeing bitcoin as a hedge against inflation. Others firmly believe that various bitcoin trust funds have heightened speculations on the cryptocurrency and is fueling the rally.

Strategists at the American multinational investment bank and financial services holding company, JPMorgan Chase &Co. believe that for a Bitcoin correction to occur, there must be a substantial reduction in the inflow of funds into major crypto funds.

According to a Bloomberg report on Monday, these JPMorgan Chase strategists led by Nikolaos Panigirtzoglou stated that inflows into the largest traded cryptocurrency fund in the world, Grayscale Bitcoin Trust, will likely make the chances of a bitcoin correction very slim.

The report noted that the total assets under management (AUM) in the Grayscale Bitcoin Trust have skyrocketed from $2 billion to a whopping $13.1 billion since the beginning of December 2019, corresponding with the digital currency’s current bullish trend.

According to the strategists, the Trust Fund is witnessing an inflow of about $1 billion per month. They further added that these inflows into the Trust Fund “are too big to allow any position unwinding by momentum traders to create sustained negative price dynamics.”

They opined that a considerable reduction in inflows into the Grayscale Bitcoin Trust Fund would stimulate a Bitcoin correction similar to what had occurred in June 2019.

Several large institutional investors and investment managers like Microstrategy, Square, Paul Tudor Jones, and Stan Druckenmiller have all ventured into the crypto industry, with Bitcoin as an entrance point. 

More Inflows Coming Up for Bitcoin?

Just recently, Elon Musk, CEO of Tesla, tweeted that he wanted to know if large transactions, one that would involve the conversion of Tesla’s balance sheet into bitcoin, can be carried out without adversely affecting the market.

He was replied in the affirmative by Michael Saylor, the CEO of Microstrategy, who even offered to share his playbook with Tesla’s billionaire CEO.

Affiliate:  Deposit 0.02 BTC, and get a 100% bonus to trade futures on Bexplus.

Follow us on Twitter, Facebook, and Telegram to receive timely updates. Subscribe to our weekly Newsletter.