Global investment banking giant JPMorgan Chase (NYSE: JPM) anticipates a reduction in crypto liquidations this month, signaling a potential market recovery beginning in August.
The firm’s recent research report highlights a significant revision in year-to-date crypto net flow estimates, from $12 billion to $8 billion, providing crucial insights for investors and traders.
This adjustment reflects significant liquidations by creditors of the now-defunct Mt. Gox exchange and Gemini creditors, as well as sales by the German government of seized Bitcoin (BTC) assets.
Key factors influencing the market
Mt. Gox, once the largest Bitcoin exchange, collapsed in 2014 after a massive hack resulting in the loss of 850,000 bitcoins.
Recently, Mt. Gox Rehabilitation Trustee announced the commencement of Bitcoin repayments to creditors, distributing approximately $9 billion worth of BTC and $50.8 million in Bitcoin Cash (BCH). This move is expected to alleviate some selling pressure in the market.
Another key factor influencing the market is the German government’s active liquidation of seized Bitcoin assets.
By July 11, the German government’s Bitcoin holdings decreased from 13,110 BTC to 9,925 BTC, eventually reaching zero after weeks of selling. These significant sales have contributed to market fluctuations, adding to the selling pressure and influencing Bitcoin’s price movements.
JPMorgan’s reduced estimate of $8 billion is composed of several key factors, including a $14 billion net flow into crypto funds by July 9, $5 billion from Chicago Mercantile Exchange (CME) futures flows, and $5.7 billion from crypto venture capital fundraising year-to-date.
This total is adjusted by $17 billion to account for the rotation from exchange wallets to new spot Bitcoin exchange-traded funds (ETFs).
BTC price analysis
Despite the downward revision, JPMorgan’s analysis suggests a potential market recovery by August.
Bitcoin’s price could see a significant surge next month due to a decline in selling pressure and Fear Of Missing Out (FOMO). Despite a continuous decline since its March all-time high (ATH), current charts from CryptoQuant suggest a potential further downtrend, positioning Bitcoin at a pivotal point.
At present, Bitcoin is trading at $60,013, reflecting a 3% increase in the last 24 hours.
BTC 7-day price chart. Source: Finbold
This price movement indicates a cooling off in selling pressure as the German government completes its liquidations. he aggressive buying by whales, driven by the price drop and inflow rates from Bitcoin ETFs, signals rising demand and a potential upward trend.
Investors and traders should closely monitor these developments as the market prepares for a potential upswing.
With strategic planning and informed decision-making, this anticipated recovery could offer significant opportunities for those invested in the cryptocurrency market.
Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
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