Markets
Cryptocurrency Market Crash Looming? JPMorgan Casts Doubt on Bitcoin’s Continued Rise
According to a recently published research note from JPMorgan, the cryptocurrency market rally will likely be short-lived and tactical in nature, and will not mark the start of an extended bull run.
The note, first reported by CoinDeskcame as the price of flagship cryptocurrency Bitcoin ($BTC) has surged more than 10% in the past few days to now trade above the $67,000 mark after failing to break above the $68,000 mark in a run that began from a low of $53,000 seen earlier this month.
The bank’s analysts believe that Bitcoin’s current price is inflated, exceeding both its $43,000 cost of production and its $53,000 volatility-adjusted gold equivalent. These indicators suggest limited upside potential for the digital asset, as it trades at a significant premium to these levels.
Analysts have highlighted recent weakness in BTC futures, attributed to liquidations by Gemini, Mt. Gox, and German government creditors. They expect these pressures to ease this month, with a potential rebound in futures positioning in August.
The bank’s outlook is tempered by expectations that Bitcoin and gold should benefit from the higher probability of a second Trump administration, as it is “seen by some investors as friendlier to cryptocurrency companies and cryptocurrency regulations, in contrast to the current Biden administration.”
The price of Bitcoin skyrocketed earlier this month after former US President Donald Trump was the victim of an assassination attempt that sparked speculation that the pro-crypto presidential candidate could win re-election later this year.
Trump was shot in the ear at a rally in Pennsylvania in a failed assassination attempt that sparked global condemnation of political violence. The former president’s defiant response to the assassination attempt, which saw him stand up as Secret Service agents tried to shield him to shout “Fight” at the crowd, appears to have galvanized support for his campaign.
In prediction markets, Trump’s chances of being elected soared after the incident, with his odds being Polymarket Trump’s chances of winning now stand at 64%, compared to 29% for Kamala Harris and just 4% for Michelle Obama. According to prediction market users, Trump’s chances of winning were at 60% just before the assassination attempt and rose to 72% after it.
There is also ongoing speculation that Trump could announce Bitcoin as a strategic reserve asset at the Nashville Bitcoin conference later this week, which could trigger a parabolic price rise, analysts say.
As noted, the number of wallets holding Bitcoins has been decreasing at a rapid rate, data shows. suggesting that traders capitulate on the belief that the price of the flagship cryptocurrency will not surpass its all-time high of $73,500 seen in March.
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