The liquidation of Bitcoin futures worth $10 billion signals a deeper correction, provided the price does not return to levels above $60,000 in the near term. This is the view of JPMorgan strategist Nikolaos Panigirtzoglou, Bloomberg reports.
The expert worries that this time the pullback in Bitcoin’s price will continue. He attributes this to the weakening momentum signals, calculated as the difference between the current price and the price in previous periods.
“Over the course of several days, the Bitcoin futures market saw significant liquidations, similar to those seen in mid-February, January, and November of last year. The momentum signals here will naturally fade over several months, given their still-high levels,” Panigirtzoglou explained.
According to the JPMorgan strategist, in the preceding three episodes inflows to investments allowed prices to quickly pierce above key resistance and give momentum traders grounds to further build long positions.
“The probability of a rapid recovery now looks much lower. The momentum decay has proved deeper and more difficult to reverse. Moreover, inflows to funds based on the leading cryptocurrency appear modest,” he concluded.
In February, a JPMorgan strategist doubted that the Bitcoin price would stay above $50,000.
In April, the bank’s analysts adjusted their forecast for Bitcoin to $130,000.
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