Key Points
- JPMorgan predicts a substantial recovery in the crypto market starting from August.
- The bank has revised its net flow estimates for the year from $12 billion to $8 billion.
JPMorgan has projected a substantial recovery in the cryptocurrency market beginning in August. However, the bank has also lowered its net flow estimates for the year from $12 billion to $8 billion.
Market Predictions and Revised Estimates
In a research note, the bank’s analysts suggested that liquidations in the crypto market should start to decrease this month. This prediction comes as the crypto markets continue to struggle after a harsh June.
The price of Bitcoin, which reached a high of $73,000 in March, fell significantly last month due to selling pressure. Factors contributing to the decline included miner offloading of BTC following a reduction in network rewards and a recent sell-off by the German government. The market also reacted strongly to the news of impending Mt.Gox repayments.
Factors Influencing Bitcoin’s Value
Bitcoin is currently trading around $57,330, a decrease of over 13% in the past month. In recent weeks, Bitcoin has been close to support zones, with some analysts suggesting that the $50,000 area could be targeted by bears.
JPMorgan analysts noted in their research report that liquidations are expected to significantly decrease by the end of July. Subsequently, Bitcoin and the broader crypto market may start to ascend.
However, JPMorgan has revised its net flow estimates down to $8 billion, expressing doubt about the previous projection of $12 billion. In addition to Bitcoin’s price being high compared to its production cost and gold, the analysts also pointed out the decrease in exchange reserves and broader sell-off pressure as key factors.
The decrease in Bitcoin reserves could be due to liquidations, mainly by Gemini or Mt. Gox creditors. Furthermore, the German government, which seized 50,000 BTC from a piracy site, has sold most of it in recent weeks.
On-chain data shows that the German government’s wallet currently holds about 4,925 BTC, worth approximately $283 million. When the German police seized the BTC from Movie2k, it was valued at about $2 billion and later rose to $3.6 billion.
