(Bloomberg) — Bitcoin retreated further from the $40,000 level on Monday, a decline that could portend more losses based on the latest analysis from strategists at JPMorgan Chase & Co.The cryptocurrency could be hurt by an exodus of trend-following investors unless it can “break out” above $40,000 soon, a team including Nikolaos Panigirtzoglou said. The pattern of demand for Bitcoin futures and the $22.9 billion Grayscale Bitcoin Trust will help determine the outlook, they added.“The flow into the Grayscale Bitcoin Trust would likely need to sustain its $100 million per day pace over the coming days and weeks for such a breakout to occur,” the strategists wrote in a note on Friday.Traders seeking clues about investor appetite for risk have been gripped by Bitcoin’s stunning rally and turbulent 12% slide from a record of almost $42,000 on Jan. 8. The cryptocurrency boom since March embodies the ebullience in financial markets awash with stimulus to fight the impact of the pandemic — as well as the concern that some of these gains may prove unsustainable.The JPMorgan strategists said Bitcoin was in a similar position in late November, except with $20,000 as the test. Flows of institutional investment into the Grayscale trust helped the world’s largest cryptocurrency extend its rally, they wrote.Trend-following traders “could propagate the past week’s correction” and “momentum signals will naturally decay from here up till the end of March” if Bitcoin’s price fails to break above $40,000, they said.Bitcoin dipped about 4% to $35,100 as of 1:14 p.m. in Tokyo on Monday. Ether, another popular digital coin, shed 5% to $1,200.Exactly what’s driven the yearlong near-quadrupling in Bitcoin’s price remains murky. Commentators have cited day traders, wealthy buyers, hedge funds, companies and even signs of interest from long-term investors like insurers.Bitcoin’s proponents argue it’s maturing as a hedge for dollar weakness and the possibility of faster inflation in a recovering global economy. Others say its defining characteristic remains speculative booms followed by busts.(Updates with latest price movements from the first paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.