According to analysts at JPMorgan Chase & Co., institutions must invest in bitcoin if it’s going to remain at the top of the financial ladder.
JPMorgan: There Is No Bitcoin Without Institutions
The monetary giant recently published a new report suggesting that money flowing into items such as the Grayscale Bitcoin Trust are necessary if bitcoin is going to continue to thrive. Should this investing stop or slow suddenly, the currency – which recently reached an all-time high beyond $24,000 – would experience a major correction that could send it instantly into the doldrums.
One of the main reasons why the bull run of 2020 is so different from the one in 2017 is precisely because the events of three years ago were largely based on retailers trading in the bitcoin space. While retailers were able to keep the price up for a while, they did not present the support that the cryptocurrency needed to stay afloat, and within 11 months, the currency had fallen from its $19,000+ high – a record at the time – to roughly $3,500 per unit. Overall, the asset lost more than 70 percent of its value in less than a year.
Institutions, back then, were a bit more wary when it came to bitcoin investing, and to an extent, we cannot blame them. The space was still largely developing at only about nine years old. There were many technical problems with the space, the assets were known for being extremely volatile, and digital crime was particularly high.
Since then, however, crypto assets have matured somewhat, and more measures have been set in place to make the world of crypto trading safer and stronger than ever. The crypto world has now attracted monster players such as MassMutual, MicroStrategy and Stone Ridge.
But should these players and others like them ever lose interest, things could get real ugly real fast. JPMorgan Chase mentions that Grayscale’s bitcoin holdings have spiked from around $2 billion at the beginning of the year to roughly $13.1 billion at press time. Thus, the amount it’s held has increased nearly seven times since January. Thus far, the company garners about $1 billion in bitcoin investments each month on average.
Let’s Hope Interest Never Takes a Dip
Right now, things are rather golden according to JPMorgan analysts. They say that the buying maneuvers of these institutions have ultimately made it so that negative price swings are near impossible for bitcoin for the time being, though if things were to ever slow down, traders and crypto fans could potentially expect to see a sink in the bitcoin price similar with what was witnessed in 2019.
During the summer of that year, the currency spiked to nearly $14,000 per unit, but ultimately fell almost 50 percent by the time December rolled in and ended the year at approximately $7,000 per unit.