The odds of a Bitcoin correction would increase if the flows into the world’s largest traded cryptocurrency fund slow significantly, according to strategists at JPMorgan Chase & Co.

The Grayscale Bitcoin Trust’s assets under management have climbed to US$13.1 billion from US$2 billion at the start of December last year, amid a tripling in the digital currency’s price so far in 2020. Inflows into the fund are running at about US$1 billion per month, the strategists led by Nikolaos Panigirtzoglou wrote in a note Friday.

While it’s hard to avoid describing Bitcoin as “overbought,” the flows into the trust “are too big to allow any position unwinding by momentum traders to create sustained negative price dynamics,” the strategists said. A major slowdown in those flows would boost the risk of a Bitcoin correction akin to the one in the second half of 2019, they said.

Bitcoin reached an all-time high of US$24,291.38 on Sunday, according to a composite of prices compiled by Bloomberg. The cryptocurrency’s backers argue it’s gaining ground among longer-term investors as a hedge against dollar weakness and risks such as higher inflation. Others claim an unsustainable speculative fervor, exacerbated by trend-following quant funds, lies behind much of the rally in Bitcoin and other digital assets.

In 2019, the largest cryptocurrency slipped 44 per cent from a peak in late June to US$7,158 by the end of that year, though it still almost doubled for 2019 as a whole.

There are signs of growing corporate and institutional interest in Bitcoin despite its famed volatility. Public companies Square Inc. and MicroStrategy Inc. recently invested in it. Investment managers Paul Tudor Jones and Stan Druckenmiller have backed the digital asset as a hedge against inflationary pressure, though price increases remain subdued.

Massachusetts Mutual Life Insurance Co., which has been around since 1851, said this month it had purchased US$100 million of Bitcoin for its general investment fund.

Over the weekend, Elon Musk inquired about converting “large transactions” of Tesla Inc.’s balance sheet into Bitcoin in a Twitter exchange with Michael Saylor, the chief executive officer of MicroStrategy.

“Are such large transactions even possible?” Musk tweeted in response to Saylor. Numerous people assured him they are, as well as Saylor, who said he had purchased more than US$1.3 billion in Bitcoin and offered to share his “playbook” offline.

Bitcoin climbed about 2 per cent to US$23,903 as of 2:31 p.m. in Tokyo. The wider Bloomberg Galaxy Crypto Index also advanced about 2 per cent.