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Bitcoin is ‘overbought’ but will suck money out of gold

In order to stop a price decline, institutions need to keep investing, JPMorgan analysts claim, but the outlook is rosy and will come at the cost of gold.

A recent report from JPMorgan Chase says Institutional investors could be all that is driving up the price of Bitcoin. Strategists led by Nikolaos Panigirtzoglou contributed to recent predictions about the role of institutions in the future of Bitcoin in comments on December 18 cited by Bloomberg.

The large-scale inflows seen this month need to continue to prevent a price correction, according to JPMorgan.

Theories related to recent price increases, as Cointelegraph noted, include institutional investors purchasing from over-the-counter transactions that suck up the available supply. This has been called a liquidity problem, and would only accentuate with time, whilst another analyst reported this week that the cycle might forever fuel the Bitcoin bull run.

However, investors need to keep up the pace for JPMorgan to stop the opposite scenario, losses.
Concerning Grayscale, which now has $13.1 billion in managed crypto reserves, they concluded that the sheer size of inflows suggests that they “are too big to allow any position unwinding by momentum traders to create sustained negative price dynamic.”

Earlier, Panigirtzoglou et al. indicated that after insurance company MassMutual announced a $100 million allocation, Bitcoin could benefit from a $600 billion cash injection from institutional adoption.
In the meantime, the latest results established a new “trend” created by Grayscale, drawing on previous concerns about gold losing its place to Bitcoin. Bitcoin exposure could include one purchase of one Grayscale unit when selling the SPDR Gold Trust’s three units. “If this medium to longer term thesis proves right, the price of gold would suffer from a structural flow headwind over the coming years,” they added.

As Bitcoin rallied to fresh all-time highs, the correlation between gold and Bitcoin has declined since October. After extending a moderate recovery from lows below $1,800, Gold saw rejection at $1,900 on Monday.

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