JPMorgan, a global investment bank, has made a bold prediction regarding the crypto market. According to their latest research report, JPMorgan expects a reduction in crypto liquidations this month, which will pave the way for a market recovery starting in August.
The bank has revised its year-to-date crypto net flow estimate from $12 billion to $8 billion. This adjustment is primarily attributed to the decline in bitcoin reserves across exchanges over the past month. The analysts at JPMorgan believe that this decrease in net flow will help stabilize the market as exchange reserves continue to dwindle.
The decline in bitcoin reserves can be attributed to various factors. One of the significant contributors is the ongoing liquidation of bitcoins by creditors of the now-defunct Mt. Gox exchange and Gemini creditors. Additionally, the German government has been actively selling seized assets, including bitcoins, which further impacted the overall bitcoin reserves.
Speaking of the German government’s involvement, it has recently announced the sale of its seized bitcoin holdings. As a result, their bitcoin stash has decreased from 13,110 BTC to 9,925 BTC. On a related note, the Mt. Gox Rehabilitation Trustee has also started repaying creditors with bitcoins. Mt. Gox, once the largest bitcoin exchange, suffered a massive hack in 2014, resulting in the loss of 850,000 bitcoins. After a decade-long process, the Trustee has begun distributing approximately $9 billion worth of bitcoin (BTC) and $50.8 million in bitcoin cash (BCH) to the affected creditors.
JPMorgan’s revised estimate of $8 billion for the year-to-date net flow includes $14 billion from net flows into crypto funds, $5 billion from Chicago Mercantile Exchange (CME) futures, and $5.7 billion from crypto venture capital funds. However, this total figure is adjusted by $17 billion to account for the shift from exchange wallets to new spot bitcoin exchange-traded funds (ETFs).
JPMorgan’s initial skepticism about the $12 billion estimate was rooted in concerns about bitcoin’s high value relative to its production cost and gold price. In June, the bank openly questioned the sustainability of the $12 billion crypto inflows, casting doubts on the future prospects of the crypto industry.
What are your thoughts on JPMorgan’s forecast for the crypto market recovery? Share your opinions in the comments section below.
