As per  JPMorgan Chase & Co, Bitcoin’s recent tumble cleared some speculative “froth" but further declines remain possible. Commodity trading advisors and other quantitative funds likely played a big role in the slide by unwinding long Bitcoin futures positions, strategists at the investment bank wrote in a 27 November note. The previous froth in momentum traders' positioning has been cleared to a large extent," they wrote while adding that momentum signals will continue to deteriorate unless Bitcoin recovers quickly.

The digital currency has had spectacular movements amid COVID-19, surging 293 percent since March 2020 to over USD 19,000 and then falling to USD 16,277 last Thursday.  Bitcoin is still gained about 160 percent thus far this year as some argue that the cryptocurrency was seen as an additional way to diversify a portfolio, a safe haven in times of economic uncertainties like the aftermath of COVID-19 outbreak.

JPMorgan strategists said that investments into and out of the Grayscale Bitcoin Trust will be key, referring to a fund that invests in and tracks the price of Bitcoin. If flows into the trust decline, the price of the crypto-currency could suffer.

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