According to a recently released research note from JPMorgan, the cryptocurrency market rebound is likely to be short-lived and tactical in nature, not the start of a prolonged bull run.
The note, first reported by CoinDesk, came as the price of the flagship cryptocurrency Bitcoin ($BTC) rose more than 10% over the last few days to now trade above the $67,000 mark after failing to surpass the $68,000 mark in a run that started from a $53,000 low seen earlier this month.
The bank’s analysts argue that Bitcoin’s current price is inflated, surpassing both its production cost of $43,000 and its volatility-adjusted gold equivalent of $53,000. These metrics suggest limited upside potential for the digital asset as it trades at a significant premium to these levels.
The analysts pointed to recent weakness in BTC futures, attributed to liquidations by creditors of Gemini, Mt. Gox, and the German government. They anticipate these pressures to ease this month, with a potential rebound in futures positioning emerging in August.
The bank’s outlook is tempered with expectations that both BTC and gold should benefit from the higher likelihood of a second Trump administration, as it is “seen by some investors as more friendly towards crypto companies and towards crypto regulations, in contrast to the current Biden administration.”
The price of Bitcoin surged earlier this month after former U.S. President Donald Trump suffered an assassination attempt that spurred speculation the pro-crypto presidential candidate could be reelected later this year.
Trump was shot in the ear at a rally in Pennsylvania in a failed assassination attempt that sparked global condemnation of political violence. The former President’s defiant reaction to the assassination attempt, which saw him stand up as secret service agents tried to protect him to yell “fight” into the crowd is believed to have galvanized support for his campaign.
On prediction markets, Trump’s chance of being elected has shot up after the incident, with his chances on Polymarket now standing at 64%, compared to 29% for Kamala Harris and just 4% for Michelle Obama. Trump’s chances of success, according to prediction market users, stood at 60% just before the assassination attempt and reached a 72% high after it.
There’s also ongoing speculation Trump could announce Bitcoin as a strategic reserve asset at the Nashville Bitcoin conference later this week, which could trigger a parabolic price rise, according to analysts.
As reported, the number of wallets holding Bitcoin has been dropping at a rapid pace, with data suggesting that traders are capitulating over the belief that the price of the flagship cryptocurrency won’t surpass its all-time high of $73,500 seen in March.
Featured image via Unsplash.
