Hello and welcome to this week's Overbit Weekly Round Up.
This week's edition is a little different because the market's mood has shifted rapidly after a huge run of liquidations in the previous week, and now major analysts are turning bearish, at least in the short term, so let's get started.
If you recall from previous editions, the Guggenheim began to become significantly more bullish over the last year, but Guggenheim's Scott Minerd told CNBC on Wednesday, "I think we could pull back to $20,000 to $30,000 on bitcoin,"
Bitcoin's price recently reached record highs near $65,000 per token, and Minerd remains long-term bullish on the cryptocurrency, which he believes will eventually reach $600,000.
Scott Minerd reported on Wednesday that Bitcoin's price is due for a drop following its rapid rise to record highs, and that a drop could drive the cryptocurrency as low as $20,000, and that "Given the massive move we've had in bitcoin over the short run, things are very frothy, and I think we're going to have to have a major correction in bitcoin,".
Bitcoin traded above $55,500 on Wednesday, following a week-long rally to near $65,000 on the same day that cryptocurrency exchange Coinbase made its Nasdaq debut. "I think we could pull back to $20,000 to $30,000 on bitcoin, which would be a 50% decline, but the interesting thing about bitcoin is we've seen these kinds of declines before," Minerd said.
Being too bullish or bearish is never a good place to be as a trader, and we'll continue to cover bearish sentiment in this issue, this time with JPMorgan. This time, JPMorgan Chase & Co. strategist Nikolaos Panigirtzoglou is concerned that if Bitcoin does not return to $60K soon, it will be a bad sign.
The last few times Bitcoin experienced such negative price behaviour, investors recovered in time to avoid deeper slumps. If the largest cryptocurrency doesn't break back above $60,000 soon, momentum signals will crash, according to strategists led by Panigirtzoglou in a note published Tuesday.
It's possible that traders, including Commodity Trading Advisors (CTAs) and crypto funds, were at least partially responsible for the recent accumulation of long Bitcoin futures, as well as the unwind in recent days, they said.
"Over the past few days, Bitcoin futures markets experienced a steep liquidation similarly to the middle of last February, middle of last January or the end of last November," the strategists said. "Momentum signals will naturally decay from here for several months, given their still-elevated level."
JPMorgan noted that in the previous three cases, the overall flow impulse was high enough to enable Bitcoin to quickly break out over the critical thresholds, resulting in more position build-ups by momentum traders.
"Whether we see a repeat of those previous episodes in the current conjuncture remains to be seen," the strategists said. The likelihood it will happen again seems lower because momentum decay seems more advanced and thus more challenging to reverse, they added. Flows into Bitcoin funds also appear weak, they said.
The takeaway? It seems the short-term bullish case for Bitcoin is far from over, but it sounds like many analysts believe the bullish momentum may be fading.
Only time will tell the end result, whether that’s a bearish reversal or bullish continuation, but one thing is certain: Overbit.com will always be here to keep you up-to-date with the latest market happenings.