Markets
JPMorgan Predicts Potential Crypto Market Crash Due to Mt. Gox Creditors Selling
Bitcoin (BTC) hit a roadblock on its bullish path in 2024, facing setbacks fueled by reversal of flows into BTC spot ETFs. The recent trend suggests a bearish trend as over 140,000 Bitcoins are set to flood the market, amplifying ongoing sell-off concerns triggered by the antiquated Mt. Gox Bitcoin sell-off.
Here’s the story.
Market nervousness
One of the looming shadows over Bitcoin price stability is the upcoming Mt. Gox Bitcoin sell-off, expected in July. JPMorgan analysts indicate this could put initial downward pressure on prices, with a recovery potentially expected by August. The situation is further complicated by the influx of $11 billion in fiat settlements to FTX creditors, some of which may end up in the market.
What does history tell us?
Considering past events such as Gemini Earn creditors liquidating part of their crypto assets, the price of cryptocurrencies has been falling since May 29th. JPMorgan’s bitcoin futures tracker, based on CME futures, suggested that retail clients, rather than institutional investors, primarily sold their cryptocurrency investments.
In the meantime, Creditors of Mt. Gox are set to receive 142,000 bitcoins, worth about $9 billion at current prices, from July to October. Despite the October deadline, JPMorgan analysts believe the majority of redemptions will occur in July. This could lead to further market pressure in July, with a potential rebound from August onwards.
Future perspectives
Looking ahead, FTX’s creditors will receive substantial cash refunds estimated at between $14 billion and $16 billion following the approval of their liquidation plan in October. Unlike previous in-kind repayments to other creditors, these liquidity injections could provide positive momentum to cryptocurrency markets as recipients consider reinvesting in digital assets.
The recent market reaction has been swift and severe, with Bitcoin witnessing a 7.5% correction, slipping below the $61,000 mark as of June 27, 2024, settling at $60,720. As July approaches, investors’ attention remains fixed on whether Bitcoin will experience a recovery or sink further into uncertainty by the end of the month.
What will you do with your cryptocurrency investments in July?