Key Takeaways:
In a research report published on Wednesday, analysts from global investment banking giant JPMorgan have predicted that the crypto market should be on a path to recovery from August onward.
JPMorgan Analysts Beleive Crypto Market To Recover Starting August
Previously, the bank revised its year-to-date crypto net flow estimate down from $12 billion to $8 billion, citing Bitcoin liquidations by now-defunct exchange Mt. Gox and Gemini to creditors and the German government’s sale of seized assets as contributing factors.
The Wall Street firm said it was skeptical that its prior estimate of $12 billion in net flow would continue for the rest of the year given how high Bitcoin (BTC) was relative to its production cost or the price of gold.
The bank’s analysts, led by managing director and global strategist Nikolas Panigirtzoglou, wrote that the reduction in the estimated net flow is largely driven by the decline in Bitcoin reserves across exchanges over the past month.
JPMorgan’s reduced estimate of $8 billion is comprised of a $14 billion net flow into crypto-focused funds on July 9th, $5 billion in Chicago Mercantile Exchange (CME) futures flows, $5.7 billion of fundraising by crypto venture capital funds year-to-year, minus an adjustment of $17 billion to account for funds moving from wallets on exchanges to the newly-launched spot Bitcoin exchange-traded funds (ETFs).
German Government’s Liquidations and Crypto Exchanges Mt. Gox and Gemini’s Customer Reimbursement Put Pressure on the Market
The German government has been actively liquidating the BTC it seized from the operators of a pirated movie website. A wallet belonging to the country’s criminal police department saw its Bitcoin stash go down from 13,110 BTC, approximately $748 million, on Wednesday, to 9,225 BTC ($526.1 million) by Thursday.
Simultaneously, the Mt. Gox trustee announced last week that it had begun repayments to customers who were victims of the hack that occurred on the exchange over a decade ago. Mt. Gox, once the world’s largest Bitcoin trading platform, suffered an exploit and collapsed in 2014 after 850,000 BTC – $48.4 billion in today’s price – were stolen from its reserves.
10 years later, the exchange’s trustee is distributing approximately $9 billion worth of BTC and $50.8 million in Bitcoin Cash (BCH) to creditors.
Crypto exchange Gemini credited $940 million to distressed Gemini Earn customers in May. These clients had their funds trapped in 2022 after crypto lending firm Genesis, a partner of the Gemini Earn program, collapsed and declared bankruptcy.
Despite the circumstances, Gemini managed to repay all its clients in kind. Gemini Earn customers got back all the crypto they had lent to the program.
JPMorgan Analysts Predict Altcoin Season To Commence In August
JPMorgan’s report also states that if Bitcoin’s expected price rise occurs in August, then altcoins could recover as well. A common misconception in the market is that altcoins suffer from BTC’s price growth, resulting in Bitcoin prices rising and other cryptocurrencies remaining stagnant or declining.
According to the bank’s analysts, altcoins are expected to follow Bitcoin’s lead next month. In fact, during the onset of the altcoin season in the latter half of 2023, the tokens were following Bitcoin’s cue as the market was anticipating the launch of the first-ever ETF backed by BTC.
However, 70% of altcoins are performing worse than Bitcoin over the last 90 days. There are only a handful of altcoins in the green and are doing better than BTC – Toncoin (TON), PEPE, BONK, Kaspa (KAS), Monero (XMR), and Tron (TRX).
Experts believe that if there is to be an altcoin season this year, it will likely be in August.
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