JP Morgan: Bitcoin Volatility Needs to Reduce for Price to Steady Above $50k

JP Morgan strategists opine that Bitcoin volatility needs to taper for prices to remain above $50k. In a note to investors on Feb 16, Nikolaos Panigirtzoglou and his team said BTC/USD price action is fragile with real risks of a correction at spot rates.

Bitcoin Price Rises Despite Volatility Concerns

At the time of writing on Feb 17, the Bitcoin price is trading above $51k, adding five percent on the last day and registering a new all-time high.

From H2 2020, a month after Bitcoin halved, the digital asset’s prices have been on an upward trend, blasting investor expectations.

Outside of retail investors, the entry of real money investors seeking exposure to Bitcoin and other cryptocurrencies, including Ethereum, continues to rise. This suggests interest and confidence.

Previously, JP Morgan analysts projected Bitcoin to receive $600 billion in institutional investment in years ahead. Following MassMutual’s $100 million investment in Bitcoin, the investment bank said:

“MassMutual’s Bitcoin purchases represent another milestone in the Bitcoin adoption by institutional investors. One can see the potential demand that could arise over the coming years as other insurance companies and pension funds follow MassMutual’s example.”

Bitcoin Rising on High Retail Inflows

On Tuesday’s note, JP Morgan analysts pointed out a possible opportunity for further price gains.

The discrepancy between the Bitcoin market cap and the amount of funds allocated by high net-worth investors may be an opportunity for investors.

In their assessment, the global bank said Bitcoin has over $700 billion in market valuation. Yet, institutional-grade investors have channeled a mere $11 billion.

They pinned this to a high retail inflow that has been exceptionally high since January 2021.

Bitcoin ETF Applications

Regardless of the community’s expectations, there are regulatory hurdles that institutions still face before getting Bitcoin and crypto exposure.

For rapid capital injection, especially of the projected $600 billion, their entry into the sphere should be seamless.

Already, there are hints of what lies ahead. There are now more institutions applying for a Bitcoin ETF.

If the SEC approves any of their application, Bitcoin and its derivatives will shoot above spot rates to six figures as analysts forecast by the end of the year.

Concurrently, subsequent liquidity because of institutional participation will lower volatility.

Presently, Grayscale Investment receives a bigger chunk of speculative capital from institutions and is one of the largest Bitcoin trusts in the space.

As BTCManager reports, Grayscale Investment Assets Under Management (AUM) continues to rise, benefiting from the current Bitcoin bull run.