U.S. bank JPMorgan Chase (NYSE:JPM) is warning of a coming collapse in the price of Bitcoin.
Analyst Nikolaos Panigirtzoglou said in a note to clients that if the largest cryptocurrency doesn’t break back above $60,000 U.S. soon, momentum signals will collapse.
JPMorgan Chase says that traders and cryptocurrency funds are largely behind the build-up of long Bitcoin futures in recent weeks, as well as the price drop seen in recent days.
Bitcoin futures markets have experienced a steep liquidation this week. “Momentum signals will naturally decay from here for several months, given their still elevated level,” JPMorgan Chase said in its analysis.
Bitcoin rose as high as $64,870 U.S. at the time of the NASDAQ listing of cryptocurrency exchange Coinbase but has since retreated to $55,000 U.S. The cryptocurrency is still up about 90% year-to-date.
The digital coin, down in five of the last six trading sessions, is struggling to overtake its 50-day moving average of $56,819 U.S. Should Bitcoin be unable to breach its short-term trend line, it could move lower and test the $50,000 U.S. level, about a 10% decline from where it’s currently trading. The next area of support would be its 100-day moving average around $49,212 U.S., according to JPMorgan Chase.
Smaller digital coins that had run up in recent days have also suffered declines, with Dogecoin declining roughly 20% to trade around 31 cents. That’s down from a high of 42 cents.