Markets
JPMorgan Predicts Potential Crypto Market Crash Following Mt. Gox Creditor Sales
Bitcoin (BTC) has hit a hurdle 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trend as over 140,000 Bitcoins are expected to flood the market, amplifying ongoing sell-off fears triggered by the outdated Mt. Gox Bitcoin Massive Sale.
Here is the story.
Market nervousness
One of the shadows hanging over Bitcoin’s price stability is the impending sale of Bitcoin by Mt. Gox, which is expected to begin in July. JPMorgan analysts say this could put downward pressure on prices, with a recovery potentially expected by August. The situation is further complicated by the influx of $11 billion in fiat compensation to FTX creditors, some of which could end up in the market.
What does History tell us?
Looking at past events like Gemini Earn creditors liquidating part of their crypto assets, the price of cryptocurrencies has been dropping since May 29. JPMorgan’s Bitcoin Futures Position Indicator, based on CME futures, suggested that retail clients, rather than institutional investors, primarily sold their cryptocurrency holdings.
During this time, Mt. Gox Creditors Investors are expected to receive 142,000 bitcoins, worth around $9 billion at current prices, between July and October. Despite the October deadline, JPMorgan analysts estimate that most repayments will take place in July. This could lead to further pressure on the market in July, with a potential rebound from August.
Future prospects
Moving forward, FTX creditors are expected to receive large cash repayments estimated at $14 billion to $16 billion following the approval of their liquidation plan in October. Unlike previous in-kind repayments to other creditors, these cash injections could inject positive momentum into crypto markets as beneficiaries consider reinvesting in digital assets.
The recent market reaction has been swift and severe, with Bitcoin seeing a 7.5% correction, falling below $61,000 on June 27, 2024, to settle at $60,720. As July approaches, investors’ attention remains fixed on whether Bitcoin will experience a resurgence or plunge further into uncertainty by the end of the month.
What will you do with your cryptocurrency holdings in July?