Mt. Gox creditor sell-off risk
JPMorgan warned in a research note published on Wednesday that the cryptocurrency market will face selling pressure from creditors of collapsed Bitcoin exchange Mt. Gox in July. Mt. Gox's trustees said earlier this week that repayments to creditors would begin in July. JPMorgan Chase pointed out that this news triggered concerns in the market because some creditors may sell immediately after receiving Bitcoin.
Mt. Gox's creditors will receive 142,000 bitcoins, worth about $9 billion at current prices, according to an analysis by JPMorgan Chase. "This concern is justified given the recent behavior of Gemini's creditors, as they have liquidated some of the crypto assets they received in recent weeks," a team led by JPMorgan analyst Nikolaos Panigirtzoglou wrote in a report.
What is the impact on Gemini creditors?
JPMorgan noted that negative price action in the crypto market since May 29 suggests that some Gemini creditors, primarily retail clients, may have taken at least partial profits in recent weeks. Gemini announced on May 29 that its Gemini Earn users had recovered all their digital assets following a settlement with Genesis. JPMorgan stressed that while Mt. Gox's creditors have an October repayment deadline, most repayments are expected to occur in July.
Source: Gemini Gemini announced that Gemini Earn users have recovered all their digital assets after settling with Genesis.
If most Mt. Gox creditors are liquidated in July, the crypto market is expected to sell off next month before rebounding in August. This forecast is based on the impact of the recent Gemini creditor selloff on the market, as well as the expected behavioral pattern of Mt. Gox creditors.
Potential Market Volatility in July
Additionally, creditors of bankrupt cryptocurrency exchange FTX are expected to receive cash payments after October 7, which could support the market. JPMorgan noted that there was a roughly three-month lag between Mt. Gox creditor selling and FTX creditor reinvestment, which could weigh on the market in the short term.
JPMorgan Chase said it is facing short-term market volatility and uncertainty. Investors need to pay close attention to market dynamics and take appropriate risk management measures.
JPMorgan Chase also emphasized that the market is expected to rebound in August after experiencing short-term selling pressure. Especially after FTX creditors receive cash payments, the market is likely to regain support. Therefore, when facing short-term risks, investors should also pay attention to medium- and long-term market trends and opportunities.
Overall, JPMorgan Chase's report provides investors with an important market warning, reminding investors to pay close attention to market dynamics in the coming July and take appropriate risk management measures. As market uncertainty increases, investors need to remain cautious and adjust investment strategies when necessary to respond to possible market changes.
