JPMorgan, a leading global investment bank, has made a bold prediction about the recovery of the cryptocurrency market. According to a recent research report by the firm, JPMorgan expects a decline in crypto liquidations this month, with the market poised to bounce back starting in August.
The bank has revised its estimate of the net flow of cryptocurrencies for the year. Initially projected at $12 billion, JPMorgan now anticipates a lower figure of $8 billion. This adjustment is attributed to the decrease in bitcoin reserves held by exchanges over the past month.
The decline in bitcoin reserves is primarily a result of liquidations carried out by creditors of several entities. Notably, there have been bitcoin liquidations by the creditors of Mt. Gox, the now-defunct exchange, as well as Gemini creditors. Additionally, the German government has been actively selling off seized assets, including bitcoin.
Recent data shows that the German government's bitcoin holdings have decreased from 13,110 BTC to 9,925 BTC. At the same time, Mt. Gox's Rehabilitation Trustee has announced the commencement of bitcoin repayments to its creditors. Mt. Gox, once the largest bitcoin exchange, suffered a major hack in 2014, leading to the loss of 850,000 bitcoins. After a decade-long process, the Trustee has begun distributing approximately $9 billion worth of bitcoin (BTC) and $50.8 million in bitcoin cash (BCH) to the affected creditors.
JPMorgan's revised estimate of $8 billion in net flow consists of $14 billion from crypto funds, $5 billion from Chicago Mercantile Exchange (CME) futures, and $5.7 billion from crypto venture capital funds. However, this total is adjusted by $17 billion to account for the shift from exchange wallets to new spot bitcoin exchange-traded funds (ETFs).
JPMorgan's skepticism regarding the initial estimate of $12 billion stemmed from concerns about bitcoin's high value relative to its production cost and the price of gold. In June, the bank expressed doubts about the sustainability of the $12 billion inflows into the crypto industry.
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