Markets
Crypto Liquidations Will Decrease, BTC and Crypto Markets Will Recover: JP Morgan
Bitcoin and Cryptocurrency Market Will Recover
In a recent research report on Thursday, JP Morgan stated that crypto liquidations are expected to ease this month and that the market should see a massive recovery starting in August. The bank also lowered its year-to-date crypto net inflow estimate from $12 billion previously to $8 billion in an updated projection.
The Wall Street firm revealed it was skeptical that its previous estimate of $12 billion would hold for the rest of the year, given Bitcoin’s rise relative to its cost of production or the price of gold, the report said.
Analysts led by Nikolaos Panigirtzoglou wrote that “the reduction in estimated net inflows is largely driven by the decline in Bitcoin reserves on exchanges over the past month.”
The cause of the decline in reserves
The bank said the decline in reserves likely reflects liquidations of bitcoin by creditors of Gemini or the now-defunct cryptocurrency exchange Mt. Gox, or sales by the German government, which has been disposing of cryptocurrencies seized from criminal activity.
The German government’s ongoing sell-off of BTC has been a concern for the market. Its seizure of over $2 billion in the leading cryptocurrency has led to massive sell-offs in recent weeks and the asset’s price has reflected the increased pressure.
The bank’s reduced estimate of $8 billion comprises a net inflow of $14 billion into crypto funds through July 9, Chicago Mercantile Exchange (CME) futures flows of $5 billion, $5.7 billion of fundraising by crypto venture capital funds year-to-date, minus a $17 billion adjustment to account for portfolio rotation on exchanges into new spot bitcoin exchange-traded funds (ETFs).
Bitcoin recovering slightly
Bitcoin is currently trading at $57,820. The token has fallen by over 12% in the past 30 days, according to CoinMarketCap. However, it is reversing slightly amid positive US inflation data revealed today.