Potential Short-Term Recovery in Cryptocurrency Market Expected to be Transient, Predicts JPMorgan
A recent research report by JPMorgan highlighted that any potential recovery in the cryptocurrency markets in the immediate future is likely to be short-lived and not indicative of a sustained bullish trend. The bank emphasized that the current price of bitcoin (BTC) is disproportionately high compared to its production cost of $43,000 and in relation to its volatility-adjusted comparison to gold, which stands at $53,000. At the time of the report, bitcoin was trading at approximately $67,220.
JPMorgan pointed out that the momentum in bitcoin futures has been lackluster in recent weeks due to significant BTC liquidations by creditors of Gemini, Mt. Gox creditors, and the German government. However, the bank anticipates a decrease in liquidations in the coming month and remains optimistic about a potential recovery in Chicago Mercantile Exchange (CME) bitcoin futures positioning by August.
Furthermore, the report suggested that both bitcoin and gold could experience positive outcomes from a higher probability of a Trump reelection. Some investors view a second Trump presidency as more supportive of crypto companies and regulations compared to the current Biden administration. Analysts, led by Nikolaos Panigirtzoglou, highlighted this sentiment, indicating a favorable outlook for these assets under a potential Trump administration.
There is speculation circulating that Trump might announce bitcoin as a strategic reserve asset during the upcoming Nashville Bitcoin conference, which could potentially trigger a significant surge in bitcoin’s price, according to Markus Thielen, founder of 10x Research.
In conclusion, while the cryptocurrency market may witness a temporary rebound, JPMorgan’s analysis suggests that it may not signify a sustained bullish trend. The bank’s observations on bitcoin’s pricing dynamics, coupled with the potential impact of a Trump reelection on digital assets, provide valuable insights into the evolving landscape of cryptocurrencies and their intersection with broader geopolitical developments.
