JPMorgan analysts say bitcoin could plummet to as low as $25,000

According to some analysts at JPMorgan, the “unlock” of a poplar Bitcoin Fund might result in further selling spot of bitcoin, pushing the digital currency’s price to as low as $25,000.

In his client writing, analyst Nikolaos Panigirtzoglou said, “While weak flows and price dynamics resulting last month’s selloff fueled Bitcoin’s recent declines, possible shares in the Grayscale Bitcoin Trust upon the expiry of a six month lockup period could be an additional headwind.”

Over the past few months, the leading cryptocurrency by market capitalization fell nearly 50% from its mid-April all-time high of $64,800. At press time, according to CoinGecko tracking, bitcoin is changing hands at $32,185, being in an overall bearish market right now.

Grayscale affecting bitcoin

Grayscale products, which are publicly traded financial instruments that hold a small number of spot cryptos like bitcoin and ethereum, are crucial parts of the broader crypto market.

There are usually aimed towards individuals and institutional investors with high net worth who doesn’t want to interact with a shady crypto exchange that may shut down overnight as well as deal with custody of their own crypto.

The Bitcoin Trust of Grayscale is one of the only ways for regulated investors in the U.S. to be exposed to the crypto market. The problem is, GBTC holdings are locked for a period of six months and are not purchase on the open market and trade at a premium.

A big dump lies ahead

If the GBTC “unlocks,” investors that now sit in larger profits compared to what they had six months ago will be incentivized to sell their bitcoin rather than to hold on to their stash.

This will then create downward pressure, as tens of millions of dollars worth of bitcoin will be sold.

“It would still take price declines to the $25,000 level before longer-term momentum would signal capitulation,” said the analysts at JPMorgan.

 

Image courtesy of Cointelegraph News/YouTube

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