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Cryptocurrency markets will face selling pressure in July from Mt. Gox creditors: JPMorgan
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JPMorgan said cryptocurrency markets face downside risk due to potential selling pressure from Mt. Gox creditors in July.
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According to the report, lenders will receive 142,000 bitcoins and there are fears that some will sell their tokens as soon as they receive them.
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The bank said it expects cryptocurrency markets to recover in August.
Cryptocurrency markets will face downside risk in July due to potential selling pressure from creditors of defunct bitcoin exchange {{BTC}} Mt. Gox, JPMorgan (JPM) said in a research report on Wednesday.
The trustee of Mt. Gox exchange said earlier this week that it would repay creditors July. JPMorgan notes that the announcement has destabilized cryptocurrency markets due to concerns that some lenders will sell off their bitcoins in July as soon as they receive them. Lenders are set to receive 142,000 bitcoins worth about $9 billion at current prices.
“This fear is justified given the recent behavior of Gemini creditors who are alleged to have liquidated some of the cryptocurrencies received in recent weeks,” wrote analysts led by Nikolaos Panigirtzoglou.
The bank said that, given the negative price action in cryptocurrency markets since May 29, it was “fair to assume that some Gemini lenders, who are mostly retail clients, have realized at least a partial profit in recent weeks.” Gemini announced on May 29 that its Gemini Earn users had received all their digital assets in kind, following the deal with Genesis.
JPMorgan notes that while there is an October deadline for repayment to Mt Gox. creditors, the majority of repayments are expected to occur in July.
If most of the liquidations by Mt. Gox creditors occur in July, cryptocurrency markets are expected to experience a sell-off next month before recovering in August, the report said.
Cash payments to creditors The bankruptcy of the FTX cryptocurrency exchange, expected sometime after October 7, could support the markets, but the problem is that there is a gap of about three months between the potential sale of Mt. Gox creditors and the reinvestment of the creditors of FTX later in the year, the report adds.
To know more: Mt. Gox will begin refunds in July; BTC slips below $61,000