JPMorgan Analysts: Crypto Rebound Likely Tactical, Not Sustainable
JPMorgan analysts have suggested that any forthcoming recovery in cryptocurrency prices will likely be tactical, short-term and strategic, rather than marking the start of a prolonged upward trend. They noted that Bitcoin's current price of around $67,500 is substantially higher than its production cost of about $43,000. Additionally, when adjusted for volatility and compared to gold, Bitcoin's value is approximately $53,000.
In their latest report issued on Thursday, JPMorgan analysts reiterated that they expect crypto rebounds to begin from August as liquidation pressures ease post-July. They pointed out that Bitcoin futures have been under pressure recently due to significant liquidations by entities such as Gemini, Mt. Gox creditors, and the German government selling seized bitcoins. However, they anticipate these liquidation activities will diminish after July, paving the way for a recovery in Bitcoin futures starting in August, which would be in line with recent upticks in gold futures.
Led by managing director Nikolaos Panigirtzoglou, the analysts argue that the discrepancy between Bitcoin’s market price and its volatility-adjusted comparison to gold indicates a mean reversion around the zero line. This, they believe, restricts the potential for a sustained increase in Bitcoin prices over the long term.
Moreover, the analysts discussed the potential impact of a second Donald Trump presidency on Bitcoin and gold. They believe that both assets could benefit if Trump were to return to office. According to the analysts, some investors view Trump as more favorable toward crypto companies and regulations compared to the current Biden administration. They also suggested that Trump's potential trade policies might drive emerging market central banks, particularly China’s, to diversify more into gold.
