- Bitcoin’s price has dropped sharply from its record high about a month ago, raising concerns of a potential market crash.
- JPMorgan reports a 64% increase in its clients’ investments in BlackRock’s bitcoin exchange-traded fund (ETF) recently.
- JPMorgan analysts raised bitcoin’s target price to $170,000, citing improved volatility and a comparison with Gold.
- Long-term bitcoin holders are selling, but new institutional buyers are absorbing sales, suggesting price volatility may decrease.
- Recent inflows into crypto ETFs indicate renewed institutional interest, potentially signaling a market rebound.
The price of bitcoin has fallen sharply since reaching an all-time high of $126,000 about a month ago, sparking fears that the cryptocurrency market may experience a crash. This decline has pushed bitcoin into a technical bear market.
JPMorgan revealed in a recent regulatory filing that its brokerage clients have increased their bets on bitcoin by 64% through BlackRock’s bitcoin ETF over the past few months. The bank’s CEO, Jamie Dimon, previously a strong bitcoin critic, has softened his stance as client demand for exposure to the digital asset grows.
The Bitcoin Price rise earlier this year coincided with gold reaching its highest level ever, leading analysts at JPMorgan, led by Nikolaos Panigirtzoglou, to revise bitcoin’s price target to $170,000. The analysts argue that volatility-adjusted comparisons to gold suggest bitcoin is currently undervalued by about $68,000. Panigirtzoglou wrote in a note viewed by MarketWatch that “having been $36,000 too high compared with gold at the end of last year, bitcoin is now around $68,000 too low,” pointing to strong upside potential over the next six to twelve months.
The recent bitcoin price drop has largely been attributed to long-term holders selling their assets to take profits. Alex Blume, CEO of investment advisor Two Prime, said in an email, “We are seeing large, long-term holders of bitcoin take some profits after holding the asset for several years.” He noted that although this selling is occurring, large institutions including ETFs, corporate treasuries, and sovereign wealth funds are buying, which may lead to lower price volatility and sideways trading in the near term.
In addition, positive inflows into crypto ETFs during the past week have been interpreted as early signs of renewed institutional confidence. Gracy Chen, CEO at crypto exchange Bitget, indicated via email that these inflows suggest the market may be preparing for a recovery after a period of hesitation.
The developments come amid ongoing support for cryptocurrency from U.S. political figures and continued growth in institutional bitcoin adoption. BlackRock’s IBIT bitcoin ETF has become the fastest growing ETF of all time, reaching $80 billion in assets under management five times faster than the previous record-holder.
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