First Mover: Why JP Morgan Is Bearish on Bitcoin

PLUS: Bitcoin holds support at $32K as rally fades

Everything you need to make sense of the crypto markets and beyond By the CoinDesk Markets Team Edited by Lawrence Lewitinn, Managing Editor, Global Capital Markets June 24, 2021 Sponsored by     Bitcoin (BTC) -2.9%  $33,240 Ether (ETH)  -3.7%  $1,933 (Price data as of June 24 @11:00 UTC) If you were forwarded this newsletter and would like to receive it, sign up here.  Good morning. Here's what we're writing about: Market Moves: Grayscale 'Unlockings' Poses Downside Risk to Bitcoin Price, JPMorgan Says Technician's Take: Bitcoin Relief Rally Fades; Support Holds at $32K Check out the CoinDesk TV show "First Mover," hosted by Christine Lee, Lawrence Lewitinn and Emily Parker at 9:00 a.m. U.S. Eastern time. Today the show will feature guests: Francis Suarez, Mayor of Miami Bobby Ong, CoinGecko Co-Founder and COO   Sam Bankman-Fried, FTX CEO Biggest Movers These are the biggest movers in the CoinDesk 20 over the past 24 hours:   Gainers: Cardan (ADA): +5.2% The Graph (GRT): +4.7% Filecoin (FIL): +3.3% Losers: Aave (AAVE): -10.4% Uniswap (UNI): -5.4% NuCypher (NU): -4.7%   The CoinDesk 20 are 20 digital assets filtered from the larger universe of thousands of cryptocurrencies and constitute roughly 99% of the market by volume at eight of the largest and most trustworthy exchanges. Market Moves by Omkar Godbole Grayscale 'Unlockings' Poses Downside Risk to Bitcoin Price, JPMorgan Says While some observers say bitcoin (BTC) has bottomed out, analysts at JPMorgan remain bearish, identifying the impending unlocking of shares in the Grayscale Bitcoin Trust (GBTC) purchased in January as a source of downside risk to the cryptocurrency.   "Despite some improvement, our signals remain overall bearish," JPMorgan strategists led by Nikolaos Panigirtzoglou wrote in a note Wednesday. "Selling of GBTC shares exiting the six-month lockup period during June and July has emerged as an additional headwind for bitcoin."   Grayscale Bitcoin Trust, the world's largest digital-assets fund manager, allows institutional investors to gain exposure to bitcoin through shares in the trust, which currently holds 654,600 BTC. That's more than 3% of the cryptocurrency's supply. Grayscale is a unit of Digital Currency Group, which also owns CoinDesk.   Accredited investors can buy GBTC shares directly at the net asset value (NAV) in daily private placements by depositing bitcoin or U.S. dollars. The shares can be sold in the secondary market only after a six-month lock-in period.   The trust's popularity exploded at the end of the last year, when the premium on GBTC shares rose to a record-high 40% on Dec. 17. As such, investors rushed to carry trade or buy shares at NAV in a bid to sell them at a premium six months later. According to JPMorgan, the trust saw record inflows of $2 billion in December, followed by $1.7 billion in January.   The January tranche is scheduled for unlocking next month and is likely to release 140,000 bitcoin worth of shares, CoinShares' chief strategy officer Meltem Demirors pointed out on Twitter.    After unlocking, investors have the option of liquidating their shareholdings in the secondary market. Analysts at JPMorgan foresee investors selling at least some of their shares, leading to "downward pressure on GBTC prices and on bitcoin markets more generally."   What's not clear is whether investors will reinvest proceeds back into Grayscale by rebuying bitcoin and transferring it over to the trust. If that happens, bitcoin will likely pick up a strong bid.    Until February, the shares consistently traded at a premium. That kept overall demand strong, with investors rotating money back into the trust after unlockings.  Grayscale's Bitcoin Trust (GBTC) Premium (Source: Skew) Now, however, the incentive to reinvest is relatively low. The so-called Grayscale carry trade has lost its shine ever since GBTC began trading at a discount in February. As of Wednesday, the shares traded at a discount of 12.17% to the net asset value, according to data source Skew.    Nevertheless, some analysts say the discount offers retail investors an opportunity to buy bitcoin on the cheap. "Investors looking for long-term passive bitcoin exposure are probably better off buying GBTC over spot bitcoin since you get paid to wait more via the discount than you pay in excess fees," David Grider, a strategist at investment research firm FundStrat, wrote in an email in May.    Read the original story here: Grayscale 'Unlockings' Poses Downside Risk to Bitcoin Price, JPMorgan Says A message from Nexo Your digital assets deserve a savings account in their BEST INTEREST. Leading crypto lender Nexo treats you, your crypto and your fiat to industry-best Crypto & Fiat services, featuring:    * Up to 12% interest on digital assets, paid out daily! * Yields available on BTC, ETH, LTC, BCH, XRP, XLM, EOS, TRX, LINK, BNB, PAXG, USDT, USDC, TUSD, PAX, DAI, HUSD, GBP and EUR. * No minimum or maximum limits on funds deposited, offering infinite opportunities to earn. * #ZeroFees on all transactions. * Military-grade wallet security and top-tier insurance on all custodial assets with SOC 2 Type 2 certified crypto custodian BitGo. Get started at nexo.io Technician's Take by Damanick Dantes, CMT Bitcoin Relief Rally Fades; Support Holds at $32K Bitcoin's (BTC) price gave up some of its gains after rising nearly 20% from the shakeout low close to $29,000 on Tuesday. The cryptocurrency is holding support above $32,000, although initial resistance is seen around $36,000.   Bitcoin is down about 12% over the past seven days and was trading around $33,000 at press time. Bitcoin hourly chart shows support and resistance levels with RSI (Source: TradingView) The relative strength index (RSI) on the hourly chart registered an overbought signal on Wednesday, which preceded some profit taking around $34,700. Bitcoin is attempting to reverse a short-term downtrend as price settles above the 50-period volume weighted moving average on the hourly chart. Buyers should remain active given the bullish divergence on the daily RSI, although upside appears limited with resistance between $36,000 and $40,000. Read the original story here: Bitcoin Relief Rally Fades; Support Holds at $32K A message from Kaiko   Kaiko is the premier cryptocurrency market data provider for professional traders and enterprises.  Highly-granular historical and live data: Tick-level trades, order book snapshots, aggregates, reference rates and more.  Extensive coverage: 100+ spot and derivatives exchanges Flexible data delivery: Downloadable CSV files and robust REST and WebSocket APIs designed for enterprise-use. On-call support: Private slack channels, SLA's and integration assistance.  Request a trial, browse our data dictionary, and subscribe to our weekly research newsletter today!    Learn More BOLO Be on the look out for some of these upcoming events:   12:30 UTC (8:30 a.m. ET): Initial jobless claims (June 19). Est: 380,000 The cryptocurrency movement has never been so sprawling, reaching every corner of the planet. Crypto State by CoinDesk aims to connect with local communities to explore this movement of financial disruption and how it trickles down to every corner of the globe, from DeFi investment opportunities to alternative ways to transact and store wealth. We're making virtual stops with audiences in Nigeria, the Middle East and Southeast Asia this year. Register for the Crypto State virtual tour. ICYMI In case you missed it, here are the most recent episodes of "First Mover" on CoinDesk TV:   Will Bitcoin Hold Above $30K Support? Cybercrime Raising Privacy Coin Concerns "First Mover" dives into top crypto stories: bitcoin's outlook amid market swings, privacy coins and their role in cybercrime, and news regarding El Salvador's path to bitcoin adoption. Guests include vocal bitcoin critic Steve Hanke of the Cato Institute and Johns Hopkins University and Vik Sharma of Cake Wallet that facilitates the Monero privacy coin. Plus, Rarible's Alex Salnikov plans to build a community-owned NFT marketplace from its latest funding round. EIP 1559: Ethereum's Fee Market Upgrade Explained CoinDesk Research's newest report dives into the economic impacts and investment implications of Ethereum Improvement Proposal (EIP) 1559. At its core, the code change is designed to make transaction fees on Ethereum less volatile and more predictable.  At the same time, EIP 1559 also poses several risks to Ethereum including risks of miner capitulation or revolt, technological risk in the form of unexpected bugs, and risk of user disappointment. In this report, CoinDesk Research gives an overview of how EIP 1559 works and its intended impact for investors, miners and users. Download the full report today. Latest Headlines 'I Regret Nothing': McAfee's Wild Ride From Infosec Exec to Crypto Bad Boy McAfee, known as much for a life of drugs, women and guns as for the software that bears his name, was a popular cryptocurrency showman. NYC Mayoral Front Runner Eric Adams Says City Will Become 'Center of Bitcoins' "We're going to become the center of life science, the center of cybersecurity ... the center of bitcoins," said Adams. Bitmain Stops Sales of Mining Machines in Bid to Buoy Prices Facing China's Crackdown Delaying further sales could be seen as a way for Bitmain to shield both itself and its clients from falling prices of mining rigs. Founders of South African Crypto Investment Firm Along With $3.6B in Bitcoin Are Missing AfriCrypt investors were told not to inform police of the purported hack because it could slow the recovery of their funds. Coinbase Enters Japanese Market After Completing Registration With Financial Watchdog The move paves the way for Coinbase to begin offering five major cryptocurrencies including bitcoin and ether. Suze Orman Says She Bought $5K of Bitcoin Using Paypal, And She's a HODLer This is the first time the financial guru has acknowledged ged directly owning cryptocurrencies. ASX Boss Says His DLT Settlement System Will Be Bigger Than All of Crypto Market "We are moving ... three trillion dollars of securities onto this system and that is larger than the whole global crypto world," said Stevens. We've launched on Snapchat. On our debut show, "CoinDesk Breaks It Down," we distill the noise around dogecoin, the energy debate and more. Follow for original content, twice weekly. 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