According to strategists at investment bank JPMorgan, the volatility of bitcoin must decrease in order to keep prices at current levels.
In a letter to clients published on Tuesday, February 16, JPMorgan strategists led by Nikolaos Panigirtzoglu wrote that “if the volatility of bitcoin does not subside quickly,” its current price of about $ 50,000 “will become volatile.”
JPMorgan noted that the market capitalization of bitcoin has increased by about $ 700 billion since September last year, although institutional inflows were only about $ 11 billion.
How is this possible? According to strategists, there are two probable reasons. First, the inflow of funds from retail investors remained at a fairly high level. Secondly, there was a significant increase in speculative interest.
“The momentum from retail investors in the US has been particularly strong since January, and there is no doubt that this retail momentum has been the driving force not only for stocks but also for Bitcoin,” the letter said.
“However, the movement since January this year seems to have been more influenced by speculative influx,” the strategists said. “Maintaining current prices in the absence of increased interest from retail investors is likely to require an influx of long-term investors.”
JPMorgan strategists also commented on the recent launch of Ethereum futures on CME Group:
“In our opinion, the CME Ethereum futures market won’t take as long to grow in popularity as Bitcoin futures did, as investor interest in cryptocurrencies has grown over the past years.”
Interestingly, at the end of last month, JPMorgan strategists predicted that Bitcoin is unlikely to return to levels above $ 40,000 in the near future.
Last week, JPMorgan Co-Chair and COO Daniel Pinto said the bank would support bitcoin trading in the event of demand from customers.
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