JPMorgan: Bitcoin is ‚overbought‘ but will take more money out of gold

Institutions need to keep buying to avoid a price drop, JPMorgan analysts say, but the outlook is optimistic and will be at the expense of gold.

JPMorgan: Bitcoin is ‚overbought‘ but will still take more money out of ouroNOTÍCIAS DO MARCADO

Institutional investors may be sustaining the rise in the price of Bitcoin (BTC), says a new report by JPMorgan Chase.

In comments on 18 December quoted by Bloomberg, strategists led by Nikolaos Panigirtzoglou added to recent forecasts on the role of institutions in Bitcoin’s future.

JPMorgan: Bitcoin in „overbought“
According to JPMorgan, the large-scale entries seen this month should continue to avoid a price correction.

As published by the Cointelegraph, theories related to recent price increases include institutional investors buying through over-the-counter deals that are sucking in the available supply. This has been classified as a liquidity crisis, which will only get worse over time, while this week another analyst said the cycle could fuel Bitcoin’s bullish run indefinitely.

For JPMorgan, however, buyers need to keep pace to avoid the opposite scenario – losses.

With regard to Grayscale, which now has $13.1 billion in crypto assets under management, they reasoned that the size of the inflows means that they „are too big to allow any position to be reversed by impulse traders to create sustained negative price dynamics.

Despite this, Bitcoin was still „overbought“ at current price levels close to $24,000, with the Relative Strength Index (RSI) rising above 70. A subsequent price drop on Monday brought the RSI below this threshold.

Gold Price Pressure
Previously, Panigirtzoglou suggested that Bitcoin could Crypto Engine scam benefit from a US$600 billion cash injection from institutional acceptance, after insurance giant MassMutual revealed a US$100 million contribution.

Daily chart gold vs. BTC / USD. Source: Tradingview
Based on previous warnings about the migration of gold to Bitcoin, the latest findings have identified a new „trend“ formed by Grayscale. Exposure to Bitcoin may involve the purchase of one unit from Grayscale and the sale of three units from the SPDR Gold Trust.

„If this medium and long term thesis proves to be correct, the price of gold will suffer a structural headwind flow in the coming years,“ they added.

Bitcoin correlation vs. USD, Gold, VIX, S & P500. Source: Digital Assets Data
The correlation between gold and Bitcoin has decreased since October, as Bitcoin has reached new highs. Gold was rejected at $1,900 on Monday after extending a modest low point recovery below $1,800.