Under the title "JPMorgan Warns of Bitcoin's Weakness Amid Investor Liquidation of Futures Contracts", Bloomberg reported that in the last few instances where strategist Nikolaos Panigirtzoglou observed such negative price movements for Bitcoin, buyers returned in time to prevent deeper declines in the cryptocurrency. However, this time, the JPMorgan Chase strategist is concerned; as the strategists led by Panigirtzoglou wrote in a note on Tuesday, if the largest cryptocurrency cannot rise back above $60,000 soon, momentum signals will collapse. They added that traders, including commodity trading advisors and cryptocurrency funds, were at least behind the accumulation of long Bitcoin futures in recent weeks, along with their liquidation in recent days.
The strategic analysts explained: “In the past few days, Bitcoin futures markets have experienced sharp liquidation similarly to mid-February, mid-January, or late November; momentum signals will naturally fade from now until several months ahead, given their high level.”
**Momentum Dwindling**
In the three previous cases, the general driving force for the inflow was strong enough to allow Bitcoin to quickly rise above major thresholds, resulting in further consolidation by momentum traders, according to JPMorgan. The strategists stated: “We are still waiting to see if the previous cycles will repeat in the current circumstance.” They added that the likelihood of this happening again seems lower as the momentum decline appears more entrenched and thus harder to reverse. They noted that inflows into Bitcoin funds also seem weak.
Bitcoin surged to approximately $64,870 at the time of the Nasdaq listing of Coinbase Global Inc; however, it subsequently fell back below $60,000; the cryptocurrency is still up 90% since the beginning of the year.
