The post JPMorgan Predicts Potential Market Crash from Mt. Gox Creditor Sales appeared first on Coinpedia Fintech News
Bitcoin (BTC) hasn’t been able to regain the bullish momentum it had in the first quarter of 2024 because flows into spot BTC ETFs have started to reverse. Things are likely to get worse before they get better as more than 140,000 Bitcoins enter the market, which could make the recent sell-off worse. Another event that is creating a FUD situation in the market is the Mt. Gox highly antiquated Bitcoin sell-off.
JP Morgan Predicts Short-Term Market Crash
Analysts at the largest banking holding JPMorgan believe that payments from Mt Gox will provoke pressure from sellers only at the initial stage, in July, and in August the crypto market will recover. The consequences of a possible dump in July on the part of Mt Gox investors will be compensated by FTX’s creditors, who will receive $11 billion in compensation in fiat, part of which they will send back to the market, analysts say.
Market Reaction to Past Crypto Asset Liquidations
Looking at past events like Gemini Earn creditors, who liquidated part of their crypto assets depressed crypto price since May 29. JPMorgan’s bitcoin futures position indicator, based on CME futures, suggested that retail customers, rather than institutional investors, have been primarily selling off their crypto holdings.
Distribution Timeline and Market Impact
In the meanwhile, Mt. Gox creditors are set to receive 142,000 bitcoins, worth around $9 billion at current prices, from July to October. Despite the October deadline, JPMorgan analysts believe most repayments will occur in July. This could lead to further market pressure in July, with a potential rebound from August onwards.
FTX Cash Repayments Could Boost Market
FTX creditors are expected to receive cash repayments estimated between $14 billion and $16 billion after the final approval of its wind-down plan on October 7. Unlike the in-kind repayments to Gemini and Mt. Gox creditors, these cash repayments could positively impact the crypto markets, as crypto-native creditors might reinvest their cash into crypto assets.
Impact on Bitcoin Price
The sell-off buzz has swiftly spread across Bitcoin markets, causing an immediate 7.5% correction that dropped Bitcoin below $61,000. As of June 27, 2024, Bitcoin’s price is $60,720.
Investors are anxiously eyeing July, hoping for a price surge. Given Bitcoin’s substantial appreciation over the past decade, some creditors may opt to sell, potentially intensifying market volatility.
Also Read : Bitcoin Price Prediction: No Confirmation Of Volatile Shifts; Here’s When Serious Fireworks Will Begin
But will Bitcoin rebound, or is Bitcoin headed for a deeper plunge before the month’s end?
