Why JP Morgan Now Deems the $ 100,000 Bitcoin Hypothesis "Reasonable"

By: Bharggavi Ssayee

August 25, 2021 9:36 AM

Crypto markets are now in the green after difficult months, especially for Bitcoin (BTC) and Ether (ETH). Analysts are now forecasting bright days, given the rebounds observed in the markets.

Futures markets are recovering, according to JP Morgan

JP Morgan sees a "significant boost" in the cryptocurrency futures markets. The company's analysts are therefore optimistic. They indicate “that the previous phase of weak demand is over”.

JP Morgan strategist Nick Panigirtzoglou in his latest report highlighted the factors behind this surge in demand for futures:

“There are clear signs of improving demand in the futures markets that point to an increase in institutional demand for crypto. Momentum traders, such as CTAs, have likely amplified recent cryptocurrency price movements as shorter return period momentum signals have shifted from negative territory to positive territory for Bitcoin and Ethereum.

He specifies that these institutional purchases have reached a peak, after several relatively calm months. This move is believed to be due to the "strong rebound in the crypto markets over the past three weeks", a recovery that "took most investors by surprise".

JP Morgan analysts also changed their stance on backwardation, which they previously viewed as a bearish signal. Backwardation occurs when the price of a futures contract close to its spot price is higher than the price of that future at a later date. The trader CL of eGirl Capital had indicated in early June 2021, that the purchase of Bitcoin whenever it was in backwardation, had allowed it to make significant profits.

Bitcoin at $ 100,000: a “reasonable” forecast

Bitcoin and Ether have been on the rise recently, after suffering the May 2021 crash. Bitcoin attacked $ 48,000 twice, on August 13 and 16, 2021, and Ether hit $ 3,330. Total crypto market capitalization is now targeting $ 2.1 trillion, approaching the mid-May peak of $ 2.5 trillion before the markets collapsed.

The recovery which could lead to a reconquest of the ATH of 2021 for Bitcoin is done this time without high leverage, unlike the bullish rally at the end of 2020. The CEO of FRNT Financial, Stéphane Ouellette, had said in an interview with Bloomberg's “ QuickTake Stock ”, that this situation portended a sharp rise:

“Typically we see this as more of a strong hand rally, which implies that the leverage part of the rally comes later.”

The goal of $ 100,000 for Bitcoin then becomes, according to him, quite "reasonable":

“The last time we saw a move in this little leverage, we were pointing towards $ 20,000, and we didn't really see leverage entering the market aggressively until we were down to $ 40,000, which brought us to $ 65,000. "

The recovery in the cryptocurrency markets is supported by many exogenous factors. In addition to the global health situation which is still undermining the global economy and which continues to pose the threat of growing inflation on fiat currencies, major players in the adoption of cryptocurrencies on a daily basis by the average individual, are plunging also in the cryptosphere. This is the case of Walmart which published a job offer to find the future crypto strategy boss.