Markets
Cryptocurrency Liquidations Expected to Decline, BTC and Crypto Market Expected to Rebound: JP Morgan
Bitcoin and Cryptocurrency Market Expected to Rebound
In a recent research report published on Thursday, JP Morgan said that cryptocurrency liquidations are expected to taper off this month and the market is set to see a massive rebound starting in August. The bank also cut its estimate of the net flow of cryptocurrencies since the start of the year, from $12 billion previously to $8 billion in an updated projection.
The Wall Street firm revealed that it was skeptical that the previous estimate of $12 billion would continue for the rest of the year, given Bitcoin’s high level 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 flow is largely due to 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 bitcoin liquidations by creditors of Gemini or the defunct cryptocurrency exchange Mt. Gox, or sales by the German government as it disposed of cryptocurrencies it seized in criminal activity.
The ongoing BTC sale by the German government has sparked market concern. The seizure of over $2 billion of the leading cryptocurrency has led to massive selloffs in recent weeks and the asset’s price has reflected the increased pressure.
The bank’s lowered estimate of $8 billion includes a net flow of $14 billion into crypto funds by July 9, future flows from the Chicago Mercantile Exchange (CME) of $5 billion, $5.7 billion in fundraising by crypto venture capital funds since the start of the year, minus a $17 billion adjustment to account for portfolio rotation on exchanges into new bitcoin cash exchange-traded funds (ETFs).
Bitcoin recovers slightly
Bitcoin is currently trading at $57,820. The token has fallen by more than 12% in the last 30 days, according to CoinMarketCap. However, the trend is reversing slightly in light of the positive US inflation data revealed today.