Bitcoin
Bitcoin ‘Downside Risk’ Appears Once Again in July: JPMorgan
JP Morgan JPM analysts are predicting a potential obstacle on the way to Bitcoin BTC/USD prices in July.
What happened: Their report, released on Wednesday, highlights upcoming repayments to creditors of the defunct cryptocurrency exchange Mount Gox as a source of downward pressure on the market.
“A similar downside risk looms in July with Mount Gox creditors,” says the report, led by analyst Nikolaos Panigirtzoglou, according to for The Block.
This concern stems from the expectation that some creditors will sell a portion of their recovered Bitcoin.
Analysts point to the recent distribution of crypto assets to lenders from the Gemini Earn product as a precedent.
After receiving their stakes in late May, these creditors, who are assumed to be mostly retail investors, likely made some sales, according to JPMorgan.
This is in line with the observed drop in Bitcoin prices since the May 29 distribution.
Mt. Gox’s creditors will receive a significant amount of Bitcoin – around 142,000 coins, valued at around $9 billion currently.
While the repayment deadline extends into October, JPMorgan expects the bulk of it to occur in July.
“Assuming that the majority of settlements by Mt. Gox creditors occur in July, [that] creates a trajectory in which cryptocurrency prices come under greater pressure in July, but begin to recover from August onwards”, suggests the report.
Read too: Ethereum ETF inflows could account for up to 50% of Bitcoin ETF inflows: Galaxy Research
Why this matters: A potential silver lining emerges at the end of the year.
FTX, another failed cryptocurrency exchange, is also expected to make payments to creditors in the coming months.
Unlike Mt. Gox, these payments will be in cash, not cryptocurrency.
JPMorgan analysts believe these cash injections could boost the market, especially as crypto-focused lenders can reinvest the funds into digital assets.
“The problem for crypto markets is that there is likely a gap of around three months between potential Mt. Gox creditor liquidations in July and FTX creditor reinvestments in October/November,” the report concludes.
Benzinga Future of digital assets The event on November 19th provides a valuable opportunity to gain insights from industry leaders and navigate these dynamic market shifts.
Read next: Bitcoin Continues Sideways Despite $21 Million ETF Inflow on Wednesday
This content was produced in part with the help of AI tools and was reviewed and published by Benzinga editors.
Image: Shutterstock