JPMorgan Expects ‘Limited Downside’ for Bitcoin (BTC)

Despite the rather unimpressive start to the year, JPMorgan has stated its expectation for a “limited downside” for Bitcoin (BTC). Indeed, after the price of the digital asset failed to respond positively to Spot Bitcoin ETF approvals to start the year, many have expressed concern.

However, the financial firm has shared a positive outlook regarding the asset in a research note that was published this week. Specifically, its analysis has featured a focus on the dynamics of Grayscale Bitcoin Trust (GBTC) and the other Spot Bitcoin ETFs in the United States.

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JPMorgan Still Positive on Bitcoin Despite 2024 Start

At the end of 2023, the digital asset industry was infused with incredible optimism. Indeed, the arrival of Spot Bitcoin ETFs was expected in 2024’s first week. Subsequently, many have viewed those approvals as a catalyst for the industry at large. However, just one month into the new year that has not yet come to fruition.

Yet, there is still hope from many finance firms over the asset’s performance. Specifically, JPMorgan has stated its expectation of a “limited downside” from Bitcoin (BTC). Indeed, they identified the 20% correction in the price of the asset over the last two weeks. Moreover, they attributed that to the profit-taking on past GBTC investments.

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“Profit-taking on GBTC’s ‘discount to NAV trade’ has likely been a major drive behind Bitcoin’s correction,” they stated. “$4.3 billion has thus far exited GBTC since its conversion to ETF.” Thereafter, they noted their prediction that “most of this $4.3 billion GBTC outflow reflects profit-taking rather than a shift towards cheaper Spot Bitcoin ETFs.”

Conversely, they predict a massive change to be occurring for Bitcoin overall. Specifically, they state that “Spot Bitcoin ETFs is likely to induce a significant change in the Bitcoin market structure.”

Altogether, they note that the limited downside is mainly due to the shifting reality of Bitcoin. profit taking, reallocation of investors, and strategic product introduction highlight its present circumstance. However, those things should not hinder the asset’s overall outlook.