As Bloomberg reports, strategists led by Nikolas Panigirtzoglou believe Bitcoin could lose its luster over the short-term unless it can “break out” above $40,000. The flagship cryptocurrency breached that key level on two occasions this month, once in the lead-up to new all-time highs near $42,000 and the other just last week.
The strategists determined that the Grayscale Bitcoin Trust, which currently has $23 billion in assets under management, will play a crucial role in whether BTC returns to that level or not.
“The flow into the Grayscale Bitcoin Trust would likely need to sustain its US$100 million per day pace over the coming days and weeks for such a breakout to occur.”
If BTC fails to re-take $40,000, trend-following traders “could propagate the past week’s correction,” the analysts said. That means the path of least resistance could be lower.
Since breaching $20,000 in December, the Bitcoin price more than doubled in just three weeks. The digital currency has been rangebound in recent weeks as traders look for the next major catalyst.
In the meantime, Grayscale continues to exert considerable influence over the cryptocurrency market. Average weekly inflows into Grayscale’s digital-asset products reached $250.7 million in the fourth quarter, marking a new all-time high. The Bitcoin Trust generated $217.1 million in weekly inflows, on average.
As Cointelegraph reported last week, Bitcoin’s price rose sharply after Grayscale reopened its services to new investors on Jan. 13.