A Slowing of Grayscale Bitcoin Fund Inflows Could Prompt Price Correction: JPMorgan

Digital asset investment firm Grayscale is sucking up so much bitcoin it could sway prices.

Dec 21, 2020 at 10:14 a.m. UTC
Updated Sep 14, 2021 at 10:46 a.m. UTC

JPMorgan strategists have said the odds of a bitcoin correction would rise if flows into the Grayscale Bitcoin Trust slow down dramatically.

  • Such a drop in flows into the largest bitcoin fund would increase the likelihood of a price correction similar to the one seen in the second half of 2019, according to a note from the bank's quantitative strategists led by Nikolaos Panigirtzoglou, as reported by Bloomberg Monday.
  • The digital asset manager's bitcoin inflows “are too big to allow any position unwinding by momentum traders to create sustained negative price dynamics,” the strategists said.
  • They stopped short of saying bitcoin is overbought after the cryptocurrency soared to consecutive record highs in recent weeks.
  • The most recent data tweeted by Grayscale Investments showed the firm reached $15.5 billion in cryptocurrency assets under management on Dec. 18 – up $2 billion in less than a month. Its Bitcoin Trust is now worth over $13 billion of that total.
  • Bitcoin hit a new record price of $24,273 on Sunday. At the time of publication, prices were lower at around $23,450.
  • New York-based Grayscale is owned by Digital Currency Group, the parent company of CoinDesk. The firm allows institutional investors to buy shares in its crypto trusts, gaining exposure to the asset class without having to own the asset directly.
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