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Why JPMorgan Predicts Bitcoin to Rebound in August – DL News
- JPMorgan predicts Bitcoin recovery in August.
- Liquidations by Mt. Gox, the German government and Gemini creditors will soon ease, the investment bank said.
- JPMorgan estimates that the cryptocurrency sector has seen just $8 billion in inflows so far this year.
Bitcoin has dropped 20% in the last 30 days, but financial giant JPMorgan doesn’t expect the decline to last long.
“We continue to expect a recovery in the cryptocurrency market from August onwards,” JPMorgan analysts said in their latest Flows and Liquidity report, released on Wednesday.
The analyst group, led by managing director Nikolaos Panigirtzoglou, attributed Bitcoin’s performance to heavy selling by Gemini creditors and the German government, as well as fears that Mt. Gox creditors will soon receive their refunds.
Gemini Cryptocurrency Exchange accredited $940 million to struggling Gemini Earn customers in May. Earn customers saw their funds trapped in 2022 when cryptocurrency lending firm Genesis, a partner in the program, filed for bankruptcy in January 2023.
But Gemini managed to achieve a 100% recovery rate and paid back its customers in kind, meaning that customers who lent Earn one Bitcoin received one Bitcoin back.
Meanwhile, the German government he liquidated 32,000 bitcoins, worth $1.9 billion, have been traded on the open market in the past three weeks, according to market maker Wintermute. It now has less than $900 million left to sell.
The collapse of the crypto exchange Mt. Gox will finally soon distribute 142,000 Bitcoin to creditors. It is a colossal amount, but there are reasons to believe Creditors will not seek to redeem the $8.2 billion in one go.
“These liquidations will ease after July,” JPMorgan said, which is why the firm expects a recovery thereafter.
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JPMorgan also estimated that digital assets have received $8 billion in inflows so far this year, down 33% from its estimate of $12 billion in inflows in mid-June.
For comparison, cryptocurrencies received approximately $15 billion in inflows in 2023, $40 billion in 2022, and $45 billion in 2021.
The calculations were made based on net inflows into crypto funds, flows into CME crypto futures contracts, and fundraising by crypto venture capital funds.
The rotation of capital from cryptocurrency exchanges to other funds was also taken into account.
Tom Carreras is a market correspondent at DL News. Have a Bitcoin tip? Contact us at tcarreras@dlnews.com