Cautious forecasting by JPMorgan on the USD value of Bitcoin

A few days ago, Bloomberg reported on JPMorgan’s forecasting of Bitcoin’s USD value that appears to be decidedly cautious. 

The article cites a recent report by JPMorgan Chase & Co that recent sell-offs in the crypto markets would likely be nearing an end, as liquidations of long positions would largely be behind us.

The forecasting for Bitcoin’s USD value

The sell-offs referred to in JPMorgan’s report are those that began on 17 August, when the price lost its support at $29,000 USD. 

To properly understand JPMorgan’s forecasting, one must analyze what happened to the USD price of Bitcoin during the course of all of 2023. 

In January there was an initial strong rise, from $16,500 to nearly $24,000. 

Even though in February the price also went as high as $25,000, this key level did not hold, so much so that in March it even went back below $20,000. 

The $25,000 so far has turned out to be Bitcoin‘s key 2023 level, so the fact that it was already touched in February, albeit only for brief moments, should be considered relevant. 

After mid-March, Bitcoin’s value resumed its run, pushing first to $29,000, and then in April to as high as $31,000. 

But even then it did not hold that threshold, because from late April to mid-June another downward phase occurred that brought it right back around $25,000. 

The third upward phase occurred from the end of June until the annual high of $31,800 touched around mid-July. 

However, the market value of a BTC was actually already back below $30,000 by the end of July, with a further decline beginning in mid-August. 

JPMorgan’s forecasting

Even during this latest downward phase the final landfall was USD 25,000, although so far in August Bitcoin’s market value has not fallen below $25,200. 

This latest descent was caused by a wave of selling that occurred in recent weeks, but according to JP Morgan’s report this liquidation phase appears to be in its final stages. 

The hypothesis is that the decline in open interest is indicating that this trend is losing strength, as is often the case in such instances. 

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For this reason, JPMorgan analysts are predicting limited declines for crypto markets in the short term.

Indeed, they are assuming that the $25,000 threshold will hold, in the short term, and that a lateralization phase could occur around $26,000. 

In fact, the current situation is very different from that of early summer, when Bitcoin’s price drew momentum from several potentially positive developments for the sector, such as BlackRock’s application with the SEC to be able to issue an ETF on spot BTC. 

But that enthusiasm has died down somewhat, in part because of a small recent flight from risk-on assets due to fears about the Fed’s monetary policies and concerns about China’s economic growth.

Therefore, according to JpMorgan’s forecast, it is difficult for Bitcoin’s price to rebound in the short term. 

On the other hand, however, they do not foresee further falls in the short term either, so the assumption is for a downward lateralization below $26,000, but still above the key 2023 threshold at $25,000. 

Other forecasts

There are other forecasts circulating saying that over the medium term, Bitcoin’s price could end up losing support at $25,000. 

It is worth mentioning that the overall trend of 2023 suggests not only that $25,000 is the key level, but also that it may not hold. Indeed, at the end of February they did not hold, although by mid-June they had basically held, despite brief flips to $24,800. 

The JPMorgan report did not comment on the medium-term trend, but focused on the short term. 

In the medium term, i.e., by the end of the year, several speculations are circulating about a break of the $25,000 support, although countered by other forecasts that instead say Bitcoin’s value could return to $30,000 in the event of a positive autumn for financial markets. 

While in the short term BTC’s price movements seem to be influenced not only by macro conditions, but also by those in the crypto markets, in the medium term it seems that it is macro conditions that will influence it the most. 

This is especially so if the situation deteriorates, or if it turns out to be significantly better than expected. In such cases, macro conditions could either drive Bitcoin’s price up or down. 

On the other hand, a different discussion is about the long run, since in the spring of next year there will be the halving of Bitcoin, and this could influence the 2024 performance of the crypto markets in no small way.