Any Potential Recovery in Cryptocurrency Market Unlikely to be Long-Term: JPMorgan
JPMorgan recently issued a research report stating that any upcoming rebound in the cryptocurrency market is expected to be short-lived and not indicative of a sustained bullish trend. The report highlighted that the current price of bitcoin is disproportionately high when compared to its production cost of $43,000 and in relation to its volatility-adjusted comparison to gold, which stands at $53,000. At the time of publication, bitcoin was trading around $67,220.
The bank also noted the weak momentum in bitcoin futures in recent weeks due to BTC liquidations by Gemini creditors, Mt. Gox creditors, and the German government. However, JPMorgan anticipates that these liquidations will decrease in August and continues to anticipate a rebound in bitcoin futures positioning on the Chicago Mercantile Exchange (CME).
Interestingly, both bitcoin and gold are predicted to benefit from the higher probability of a Trump election victory. The JPMorgan analysts explained that there is a perception among some investors that a second Trump presidency would be more favorable towards cryptocurrency companies and regulations, in contrast to the current Biden administration.
Adding to the speculation, there are murmurs that Trump might announce bitcoin as a strategic reserve asset at the Nashville Bitcoin conference later this week, potentially triggering a significant surge in bitcoin’s price, according to Markus Thielen, founder of 10x Research.
In conclusion, while short-term recoveries in the crypto market are expected, JPMorgan’s research suggests that these rebounds should not be seen as the start of a sustained bullish trend. The bank maintains its stance that the current price of bitcoin is inflated and that significant liquidations and favorable regulatory developments are needed for a more prolonged recovery.