Markets
Crypto Markets To See 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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Creditors are expected to receive 142,000 bitcoins, and there are concerns that some will abandon their tokens as soon as they receive them, the report said.
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The bank said crypto markets are expected to rebound in August.
Cryptocurrency markets 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 Wednesday.
The trustee of the Mt. Gox stock exchange said earlier this week that it would make repayments to creditors July. JPMorgan notes that the announcement has roiled crypto markets due to fears that some creditors will abandon their bitcoins in July as soon as they receive them. Creditors are expected to receive 142,000 bitcoins, worth about $9 billion at current prices.
“This fear is justified given the recent behavior of Gemini’s creditors, who reportedly liquidated part of the crypto assets received in recent weeks,” wrote the analysts led by Nikolaos Panigirtzoglou.
The bank said that looking at the negative price action in the cryptocurrency markets since May 29, it is “fair to assume that some of Gemini’s creditors, who are primarily retail clients, have made 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 its agreement with Genesis.
JPMorgan notes that while there is an October deadline for repayment to Mt Gox. creditors, most repayments should take place in July.
If most of Mt. Gox’s creditor liquidations take place in July, cryptocurrency markets are expected to sell off next month and then rebound in August, according to the report.
Cash payments to creditors The bankruptcy of crypto exchange FTX, expected sometime after October 7, could support markets, but the problem is that there is a roughly three-month gap between the potential sale of creditor Mt. Gox and the reinvestment of the creditor FTX later this year, the report added.
Learn more: Mt. Gox to Start Paying Off Debts in July; BTC Falls Below $61,000