12th July 2024 – (New York) JPMorgan has issued a new forecast for the cryptocurrency market, predicting a recovery starting in August, although the bank has also adjusted its net flow estimates for the year down from $12 billion to $8 billion. This revised outlook comes after a challenging period for the market, particularly a tough June which saw significant downturns across various digital currencies.
The Wall Street bank’s research note indicates that the current liquidations plaguing the crypto market are expected to decrease by the end of July. This anticipated reduction in sell-off pressure is seen as a precursor to a potential upturn in market conditions. Despite the optimistic outlook for recovery, the bank remains cautious about the overall investment flows into the sector.
Bitcoin, which serves as a bellwether for the broader crypto market, experienced a sharp decline from its March high of $73,000, to around $57,330, marking a more than 13% drop in the past month. This retreat was primarily driven by several factors including increased miner offloading following a halving event that cut network rewards, and a significant sell-off by the German government, which disposed of a large portion of Bitcoin seized from a piracy website.
Moreover, the impending repayments by the defunct Mt. Gox exchange added to the market jitters, influencing Bitcoin’s price movements and investor sentiment. With Bitcoin now hovering near critical support zones, some market analysts suggest that it could potentially dip as low as $50,000.
In their analysis, JPMorgan’s team highlighted several contributing factors to the revised net flow estimates. These include the high price of Bitcoin relative to its production cost and its value compared to gold. Additionally, the decrease in exchange reserves, primarily driven by significant liquidations from entities like Gemini and Mt. Gox creditors, was noted as a pivotal factor affecting market dynamics.
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