JPMorgan Chase analysis: With the slow flow of Grayscale funds, it remains questionable whether Bitcoin can return to $40,000

Bitcoin enthusiasts expecting a rebound in the price of bitcoin above $40,000 are facing challenges due to volatile demand for the Grayscale Bitcoin Trust, according to JPMorgan data.

JPMorgan strategists led by Nikolaos Panigirtzoglou said in a note Friday that the pace of inflows into the Grayscale Bitcoin Trust "appears to have peaked." The fund fell 22% in the past two weeks through Jan. 22, outpacing bitcoin's 17% drop over the same period.

"The current impetus from institutional flows behind the Grayscale Bitcoin Trust is not enough to push Bitcoin above $40,000," the strategists said. "The risk is that momentum traders will continue to close their Bitcoin futures positions." JPMorgan strategists also said the short-term balance of risks remains tilted to the downside.