Extremely bullish: „Bitcoin is in a supply and liquidity crisis“
As the Bitcoin price (BTC) recovers from its dive, banking giant JPMorgan warns investors of potential risks. At the same time, Glassnode paints an extremely bullish scenario for the largest cryptocurrency. Market update.
Fears of the global spread of a mutated pathogen have led to sell-offs in the crypto market. But it is not just the crypto space that is trembling in the face of a mutation of the coronavirus. In traditional Bitcoin Profit markets, too, investors are taking their chips off the table and behaving in a risk-averse manner.
Global derisking continues as new Covid-19 strain darkens recovery prospects. Even $2.3tn US stimulus gift ($900bn Covid relief+$1.4tn regular govt funding) can’t drive away jittery mood. Europ stocks stabilize after yday’s rout. Bonds up w/US 10y 0.92%. Gold 1870, #Bitcoin 22.7k pic.twitter.com/3xHsqfv91g
– Holger Zschaepitz (@Schuldensuehner) December 22, 2020
Many fear that the situation on the markets will not calm down so quickly.
Therefore, some investors are taking their profits and also selling BTC
However, Bitcoin is currently able to recover from the price correction. At the time of going to press, the Bitcoin price is quoted at 22,701 US dollars and is thus slightly up by 0.3 per cent on the day. The market capitalisation currently amounts to over 420 billion US dollars.
Investment strategists at JPMorgan believe that the likelihood of a bitcoin correction can be seen from the Grayscale Bitcoin Trust. According to the experts, only a small inflow of capital into the trust, which is particularly popular with institutional investors, indicates a possible price correction. Grayscale now manages more than US$15 billion in digital assets.
12/21/20 UPDATE: Net Assets Under Management, Holdings per Share, and Market Price per Share for our Investment Products.
Total AUM: $15.7 billion$BTC $BCH $ETH $ETC $ZEN $LTC $XLM $XRP $ZEC pic.twitter.com/HXnCobZ2ys
– Grayscale (@Grayscale) December 21, 2020
Inflows into the fund amount to about one billion US dollars per month. Based on this, some experts suggest that the digital reserve currency’s recent rally is more sustainable than past rallies.
It is difficult to call Bitcoin overvalued, as the inflows into the Grayscale Trust are too large to allow position liquidations by momentum traders. However, if capital inflows slow, the risk of a price correction increases.
Important deadline in the options markets
In addition, next Friday is shaping up to be an important day in the bitcoin futures markets. Skew reports that over 102,200 BTC options expire on 25 December. Options contracts allow investors to bet on falling or rising prices in the crypto market. According to Skew, the expiry of bitcoin options hints at key price levels at US$15,000 and US$20,000.
Bitcoin option contract expirations have often led to increased volatility in the crypto market in the past. Holders often adjust their options contracts before such expiration dates. Investors who are in profit could therefore sell their cryptocurrencies in a big way after the expiry of the option contracts.