JPMorgan analysts doubt sustainable crypto market recovery
3 min readAccording to JPMorgan analysts, any recent recovery in cryptocurrency prices should be seen as tactical and not the start of a lasting upward trend.
This is because analysts question the sustainability of the current cryptocurrency market recovery, suggesting that the price increase may be temporary.
In a report released Thursday (July 18), analysts highlighted the disparity between Bitcoin’s current price of approximately 67,500 USD and its production cost of around 43,000 USD.
According to analysts at JPMorgan, Bitcoin’s volatility-adjusted value relative to gold indicates a fair price of 53,000 USD
They also compared Bitcoin’s volatility-adjusted value to that of gold, which indicated a value of around 53,000 USD.
This significant difference, according to JPMorgan, suggests a mean reversion around the zero line. As such, it limits the potential for significant upside in Bitcoin prices in the long term.
Analysts further noted that ongoing liquidations in the cryptocurrency market, including those by Gemini, Mt. Gox creditors and the sale of seized Bitcoins by the German government, have contributed to the recent weakness in Bitcoin futures.
However, they predict a decrease in liquidations after July, leading to a recovery in Bitcoin futures starting in August. This projection is in line with the increase seen in gold futures.
Interestingly, analysts at JPMorgan have also suggested that both Bitcoin and gold could benefit from the potential re-election of former President Donald Trump.
They explained that some investors see Trump as more supportive of cryptocurrency companies and regulations compared to the current Biden administration.
Furthermore, Trump’s potential trade policies could prompt emerging market central banks, particularly China’s central bank, to diversify their investments by increasing their holdings in gold.
This comes at a time when Trump has seen growing popularity among the crypto community, and his stance on cryptocurrencies has changed radically lately.
The former president even criticized Biden for his tough stance on cryptocurrencies, stressing that the United States should strive to be a leader in the cryptocurrency industry.
Bitcoin Addresses Drop, Indicating Potential Recovery
As reported, the number of Bitcoin wallet addresses holding BTC has been decreasing over the past month. This is according to data from on-chain analytics firm Santiment.
While this may seem worrying at first, Santiment suggests it could be good news for investors.
“When we see mass liquidations like this, the likelihood of a continued recovery only increases,” the company wrote.
Meanwhile, there has also been a decline in the percentage of Bitcoin supply in profit, currently at 89.43%, according to data from Glassnode. While this may seem discouraging, other metrics paint a more optimistic picture.
In a recent post, CryptoQuant founder Ki Young Ju noted that over-the-counter (OTC) markets are dominating centralized exchange markets. Thus, it indicates institutional accumulation.
Large whale wallets , including spot ETFs and custodial wallets, have acquired 1.45 million BTC this year, totaling approximately 9% of the circulating supply.
The weekly inflow to these whale entities has surpassed the total for the entire year of 2021, with a staggering 100,000 BTC flowing each week.
Despite a decline in trading volume on centralized cryptocurrency exchanges for the third consecutive month, Bitcoin spot markets have seen a recovery, gaining 12% over the past seven days.
