Bitcoin Holdings Liquidated by Institutional Investors in Favor of Gold
JPMorgan Chase analysts have pointed out that major institutional buyers are currently selling Bitcoin (BTC) and buying gold, as the cryptocurrency hit five-month low of around $30,000.
JPMorgan indicated that institutional investors are returning to the yellow metal in a Tuesday note to customers, implying a bearish reversal in the cryptocurrency market after Bitcoin’s price hit roughly $64,000 in mid-April.
The American megabank, highlighting open interest in Bitcoin futures contracts on the Chicago Mercantile Exchange, stated that BTC futures have already seen their first significant downturn since the bull market began in late 2020:
“The bitcoin flow picture continues to deteriorate and is pointing to continued retrenchment by institutional investors. Over the past month, bitcoin futures markets experienced their steepest and more sustained liquidation since the bitcoin ascent started last October.”
In spite of pointing out gold’s recent price surge versus Bitcoin’s decline, JPMorgan is sticking to its prior prediction that Bitcoin would reach $140,000 in the long run.
The note to investor reads as follows “This $140k price should be thought of as a long-term theoretical target assuming a convergence of bitcoin volatility to that of gold and an equalization of bitcoin allocations to that of gold in investor portfolios.”
As per JPMorgan, the actual fair value of Bitcoin is 25% of $140,000, or $35,000, on the basis of volatility ratio of Bitcoin to gold. JPMorgan analysts predicted in January that Bitcoin could become a convincing substitute to gold in the long haul, with a price of $146,000.
In a note to clients, JP Morgan pointed out “A convergence in volatilities between Bitcoin and gold is unlikely to happen quickly and is in our mind a multiyear process.”
JPMorgan’s assessment has been issued at a time when Bitcoin experiences one of the scariest intraday market drops in history, plummeting from a peak of over $43,000 to below $32,000. Thenceforth, the world’s most valuable cryptocurrency has recovered slightly, standing at $37,137 at the time of writing this article, down about 16 percent in the last 24 hours. Despite the market’s ongoing bloodbath, BTC is already up nearly 300 % in the last year, trading at highs last seen in mid-January.