In a recent report, Nikolaos Panigirtzoglou, JPMorgan’s analyst affirmed that the recent Bitcoin bull run can be attributed to the influence of institutional investors.
Institutional Investors’ Impact on Bitcoin’s Bull Run
Per the report, Nikolaos Panigirtzoglou in a document stated that institutional investors are behind the recent bull run. According to him, the Bitcoin futures contract is very important more than the market would appreciate. Also, Bitcoin futures were greatly understated in the past due to an overstated trading volume of Bitcoin on cryptocurrency exchanges.
However, the revelation from Bitwise and Blockchain Transparency Institute (BTI) that a greater percentage of Bitcoin’s trading volume accounted for by cryptocurrency exchanges could be fake brought out a bullish picture about Bitcoin futures.
The JPMorgan strategists, therefore, outlined that if 5 percent out of the $725 billion trading volume reported for Bitcoin in May is correct, then its trading volume for that month would be $36 billion.
Panigirtzoglou compared the latter with that of Bitcoin futures and discovered that the volumes on the CBOE and CME futures contracts in May spiked to $12 billion. The outcome differs from April’s $5.5 billion and monthly average volume of $1.8 billion in the first quarter of 2019.
While remarking on the latter, Panigirtzoglou said:
“The overstatement of trading volumes by cryptocurrency exchanges, and by implication the understatement of the importance of listed futures, suggests that market structure has likely changed considerably since the previous spike in Bitcoin prices in end-2017 with a greater influence from institutional investors.”
Analyst’s Comments Varies from Past Sentiment
Nonetheless, it may be worthy to note that the analyst’s recent comments vary from his opinion in the past. In another report on May 17, 2019, he explained how Bitcoin’s intrinsic value is determined by its cost of mining or “cost of production” and added that Bitcoin was trading above its intrinsic value as of May.
More comments from the report showed a comparison between Bitcoin’s spike in May and that of late 2017 where Bitcoin surged to about $19,000 before crashing. It was then predicted that like 2017, the virtual asset will also dump in price even though it did otherwise to have closed around $8,543 on the 31st of May, 2019.
On the other hand, Alex Krüger, a prominent market analyst has been quick to criticize Panigirtzoglou’s new analysis that goes contrary to the one in May. According to him, the JPMorgan analyst is only acknowledging what has been obvious for the past two months now. He opined that it is mostly institutional investors that are behind the current surge in Bitcoin’s price instead of retail investors as was the case in 2017’s bull run.