Bitcoin may have to drop to $30,000 before institutional investors jump back in: JPMorgan

  • Institutional interest in BTC has dropped drastically over the past month, with these investors waiting for Bitcoin to hit $30,000 again before jumping back in.
  • JPMorgan believes that BTC hitting $60,000 is only attractive to retail traders, with the professional ones not ready to commit at such high prices.

The 2021 Bitcoin bull run has largely been attributed to the rise of institutional investors. Be it global giants like Tesla, Ruffer and Microstrategy or family offices and hedge funds, the professionals have trooped into BTC in the past year in their droves. However, according to JPMorgan, there has been a sharp drop in institutional interest in the past few months. And to lure these investors back into the market, Bitcoin will have to drop to $30,000 again.

Institutional players had stayed away from the crypto for years despite the rise of BTC to a then-record at $20,000. However, led by Michael Saylor, an unrelenting Bitcoin bull, bigger players have become more comfortable with the industry. This has been helped by the increase in platforms catering to this calibre of traders, including custodians.

Nikolaos Panigirtzoglou, the global market strategist at JPMorgan believes that the key reason BTC has dropped in recent weeks is the exit of many professional players. These investors came into Bitcoin at the start of the year as the price began to soar. However, many have taken profits and are unlikely to get back at the current price range.

Speaking to Business Insider, he stated:

If you ask, right now, institutional investors whether $50,000 or $60,000 is looking like an attractive level for bitcoin, they will most likely say no. I fear we might need to see bitcoin moving below $30,000 for that institutional interest to pick up considerably.

Could a drop to $30,000 be the catalyst for a long-term spike?

Panigirtzoglou, who oversees JPMorgan’s note to investors – which constantly looks at Bitcoin among other assets – believes that a drop to $30,000 might do Bitcoin a world of good.

As we reported, Bitcoin is trading just short of $40,000 in what has been its highest price in two weeks. The crypto gained 12 percent on Sunday following positive sentiment from Elon Musk and Tanzania’s president.

Related: Bitcoin gains 12% to close in on $40,000 for the first time in two weeks, as analysts reveal two key levels

The JPMorgan executive’s sentiments are in contrast to many other analysts who believe that if Bitcoin were to breach $30,000, it would most likely take a nosedive further down due to momentum selling.

However, for Panigirtzoglou, the only way that institutional investors will get back in is if they feel there’s a tremendous upside to buying the crypto. He further disputed the claims that these investors were already buying the dip, stating:

If I look at these bitcoin fund flows, there is no evidence here of a buying-the-dip mentality.

The executive revealed that a good way to know that institutional investors are back is a rise in BTC futures prices as compared to spot prices. These investors prefer to use the professional futures markets to gain exposure to BTC.

Furthermore, Bitcoin products such as ETFs are a good gauge of institutional interest. According to the analyst, Bitcoin ETFs have seen waning interest, with volume in March and April dropping from previous highs.

 

About Author

Steve has been a blockchain writer for four years, and a crypto enthusiast for even longer. He is most excited by the application of blockchain to solve the challenges facing developing nations.

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