JPMorgan says big investors are not buying the bitcoin dip, prices could fall further

Published Tue, Jun 1 20211:50 PM EDTUpdated Tue, Jun 1 20212:16 PM EDT

It's been almost two weeks since the price of bitcoin took a dive to $30,000 per token, but JPMorgan says institutional investors have so far held off on buying the dip. While there are signs prices will stabilize following the correction, they may pull back even more before that happens, according to a note issued Tuesday by the bank, which provided an analysis of bitcoin's near and long-term valuation. "It now seems unlikely that we see this volatility ratio returning to the x2 levels of last summer. The best we can hope for over the medium term is for this volatility ratio to partially revert from around x6 currently to around x4 by year end," strategist Nikolaos Panigirtzoglou wrote in the note. JPMorgan predicts bitcoin will trade between $24,000 and $36,000 over the medium term, based on volatility ratios of bitcoin to gold. Panigirtzoglou added it's unlikely there'll be a full convergence of volatilities in the foreseeable future. However, the longer-term signal remains "problematic." "It has yet to turn short," Panigirtzoglou wrote. "It would still take price declines to the $26,000 level before longer term momentum would signal capitulation." Bitcoin traded lower on Tuesday by about 1.5% to around $36,175. Short-term momentum signals for ether — the native token of the Ethereum blockchain that powers smart contracts, NFTs and stablecoins — have declined, though there's nothing to suggest positions have been fully unwound, according to the note. Still, that decline could take ether prices down to $2,000 in the short term and down to $1,000 in the long-term, the firm said. The rise in bitcoin's notorious price volatility could impede further institutional adoption, Panigirtzoglou said, challenging valuation and making it less attractive than "traditional" gold in institutional portfolios. Since the plunge, institutional money has been flowing out of CME bitcoin futures and other regulated bitcoin funds in favor of gold electronic trading funds, JPMorgan said.

Omar Marques | LightRocket | Getty Images

It's been almost two weeks since the price of bitcoin