Markets
JPMorgan Predicts Potential Crypto Market Crash Due to Mt. Gox Lenders’ Selloff
Bitcoin (BTC) has hit a snag in its 2024 bull run, facing setbacks fueled by the reversal of flows into spot BTC ETFs. The recent trend suggests a bearish trend as over 140,000 Bitcoins are expected to flood the market, amplifying ongoing liquidation concerns triggered by the outdated Mt. Gox Selling Bitcoin.
Here’s the story.
market nervousness
One of the shadows hanging over Bitcoin’s price stability is the impending Mt. Gox Bitcoin sell-off, expected to begin in July. JPMorgan analysts indicate that this could put initial downward pressure on prices, with a potential recovery expected in August. The situation is further complicated by the influx of $11 billion in fiat compensation to FTX creditors, some of which could return to the market.
What does history tell us?
Looking at past events, such as Gemini Earn lenders liquidating some of their crypto holdings, has depressed the price of cryptocurrencies since May 29. JPMorgan’s bitcoin futures position indicator, based on CME futures, suggested that retail clients, rather than institutional investors, have been primarily selling their crypto holdings.
About that, Mount Gox Creditors are set to receive 142,000 bitcoins, worth about $9 billion at current prices, from July to October. Despite the October deadline, JPMorgan analysts believe most refunds will occur in July. This could lead to greater market pressure in July, with a potential recovery from August onwards.
Future perspectives
Looking ahead, FTX’s creditors are expected to receive substantial cash refunds estimated at between $14 billion and $16 billion following approval of the liquidation plan in October. Unlike previous in-kind repayments to other lenders, these cash injections could inject positive momentum into cryptocurrency markets as recipients consider reinvesting in digital assets.
The recent market reaction was swift and severe, with Bitcoin witnessing a 7.5% correction, falling below the $61,000 mark on June 27, 2024, settling at $60,720. As July approaches, investors’ attention remains fixed on whether Bitcoin will re-emerge or plunge further into uncertainty by the end of the month.
What will you do with your crypto assets in July?