Key Takeaways

  • JP Morgan has noted that Bitcoin’s current price level “looks unsustainable.”
  • The investment bank’s analysts said that asset’s price action has been influenced by speculative “retail impulse.”
  • ETH futures may pick up pace despite a slow start, the note also said.

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A $50,000 Bitcoin may not last long, according to JP Morgan. 

JP Morgan Points to Retail

Bitcoin’s current price level “looks unsustainable,” a team of JP Morgan analysts has said. 

In a report published Tuesday, Global Market Strategist Nikolaos Panigirtzoglou and his team suggested that speculative investors had fueled the recent Bitcoin price action. 

Bitcoin hit a new all-time high price of $50,000 yesterday and has since touched $51,525. 

The JP Morgan analysis pointed out that the asset’s market cap has increased by $700 billion over the last five months, “despite relatively little institutional flows.” It made specific reference to digital asset behemoth Grayscale, and notable Bitcoin investments from Tesla, Mass Mutual, and Guggenheim.

However, these institutions account for an aggregate flow of only $11 billion, the report said. It gave two possible explanations for the significant increase in market cap: inelastic supply of Bitcoin leading to a price premium for both “real money” and “speculative” investors, and retail interest dwarfing the institutional inflows. 

The note made specific reference to “retail impulse” as a key factor behind the Bitcoin price surge. It also said that volatility would need to decrease to sustain the recent price levels. 

In their findings, the team assessed the risk capital of Bitcoin and Grayscale’s GBTC offering against gold and its gold-exchanged fund, GLD. According to the report, Bitcoin and GBTC consume 6.2x more risk capital than gold and GLD. 

The report also mentioned crypto’s second-largest asset, ETH. The team looked at the recent ETH futures launch on CME, which has seen a relatively slow start, despite significant hype.

They noted that interest was similarly slow when Bitcoin launched on the derivatives exchange in December 2017. According to the report, however, ETH futures should see a quicker uptake because the market “has had a few years to mature.” 

Disclosure: At the time of writing, the author of this feature owned ETH, among a number of other cryptocurrencies. 

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