16.01.2021

JP Morgan on What Caused Bitcoin Price Crash to $8000

Bitcoin (BTC) hasn’t had the best week. In fact, the cryptocurrency is set to close down some 20% on the week, which is one of the asset’s worst performances since the bearish capitulation seen in November of last year.

JP Morgan on What Caused Bitcoin Price Crash to $8,000 1

A bit late to the party, JP Morgan recently came out with its analysis of the recent price crash, trying to explain to clients the cause behind Bitcoin’s precipitous plunge off a price cliff.

What Caused Bitcoin to Crash?

In a research note obtained by Bloomberg , JP Morgan analyst Nikolaos Panigirtzoglou and a team of strategists argued that Bakkt “probably depressed prices”, but not in the way that you may expect.

They wrote that instead of the low initial volumes, it “may be that the listing of physically settled futures contracts (that enables some holders of physical Bitcoin e.g. miners to hedge exposures) has contributed to recent price declines.”

Indeed, the launch of Bakkt’s physically-deliverable Bitcoin futures gives institutions and other larger market players another instrument through which they can play this market, potentially allowing for more complex price trends that might have been hard to obtain before.

That’s not all, however. Panigirtzoglou and the JP Morgan analysts explained that through analysis of Bitcoin futures markets, they determined that the past week saw a “mark marked capitulation” of Bitcoin long positions on BitMEX. They argue that this liquidation event “also likely contributed to the sharp falls in Bitcoin prices this week”.

JP Morgan’s analysis of the price crash is similar to others completed by other researchers, in that everyone widely believed that the launch of Bakkt and subsequent futures liquidations led to the -20% performance Bitcoin has incurred over the past week.

As reported by Ethereum World News already, eToro’s Clair Peters said the following to your crash, echoing JP Morgan to a tee:

“Pessimism over the standard of activity on Bakkt created this most recent sell-off. However , it was the liquidation concerning $600million worth of the long term positions on platforms that Bitmex that caused the particular to dramatically slump and also over a $1, 000 place 30 minute period. ”

Soon to Recover

Despite the bearish benefit action, some analysts expect for Bitcoin to hurriedly mount a recovery.

According to Josh Rager, onece Bitcoin continues to “range between heavy support near $8, 000”, the more likely it is the best way cryptocurrency will see a nearly 10% bounce to $8, 1, 000.

The idea the that as $8, 1000 has acted as an mandatory historical level, it will listed here too. A close below it may be bearish; consistent closes throughout this article it implies that bulls have any semblance of control.

Source

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