Despite recent bearish trends in the Bitcoin market, JP Morgan, an American multinational finance company, has maintained a bullish stance on the outlook for Bitcoin prices. The bank has even gone as far as announcing a timeline for the conclusion of ongoing BTC liquidations, predicting a subsequent rebound in the market. In a research report released on Wednesday, JP Morgan suggested that BTC liquidations should abate in July, paving the way for a strong bull market as bearish trends caused by sell-offs begin to subside.
While JP Morgan believes that a market recovery is imminent, it also expresses skepticism about the sustainability of the high Bitcoin inflows seen in the year-to-date flow into crypto assets. The bank has revised its former year-to-date crypto net flow estimate from $12 billion down to $8 billion. This reduction comes as a surprise, especially considering that Spot Bitcoin ETFs have been a major driver for substantial inflows into the crypto market.
JP Morgan’s skepticism is further fueled by the comparison between Bitcoin’s high price relative to its production cost and the price of gold. A crypto analyst from the bank, Nikolaos Panigirtzoglou, has highlighted the recent decline in Bitcoin reserves across exchanges as a reason for the reduced year-to-date net flow estimate. This decline is believed to be a result of ongoing selling pressures and widespread BTC liquidations executed by Mt Gox creditors and the German government.
JP Morgan has predicted that the BTC sell-off will officially come to an end in July, leading to a substantial bullish rally for Bitcoin in August. Following the bank’s predictions, many crypto analysts and community members have suggested that the recent upsurge in Bitcoin’s price is the continuation of a strong bull market. Despite concerns surrounding potential Bitcoin sell-offs, the market remains optimistic about the future of Bitcoin prices.
Impact of Mt Gox and the German Government
In June, Mt Gox announced its plans to begin repayments to creditors in July. While this news is positive for creditors, there is an underlying unease about potential Bitcoin sell-offs. With creditors receiving part of Mt Gox’s 142,000 BTC payment worth about $9 billion, fears of a widespread Bitcoin dump causing a major impact on the price of the cryptocurrency persist. Additionally, the German government has been selling nearly 100% of its Bitcoin holdings seized from criminals, further affecting the market’s sentiment and triggering significant price declines that have delayed the anticipated Bitcoin bull run.
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