Any Near-Term Rebound in Crypto Market Likely to Be Temporary: JPMorgan

JPMorgan predicts that any near-term rebound in the cryptocurrency market will be tactical rather than the beginning of a new long-term bullish trend. This article explores the factors influencing this outlook and the potential impacts on Bitcoin and other cryptocurrencies.

Points

• JPMorgan predicts any near-term rebound in crypto will be tactical.
• Bitcoin’s current price is deemed too high relative to production cost and volatility-adjusted comparison to gold.
• Liquidations from Gemini, Mt. Gox, and the German government have weakened Bitcoin futures momentum.
• Speculation about Trump’s pro-crypto policies could benefit Bitcoin and gold.

Tactical Rebound Expected

JPMorgan has forecasted that any rebound in the cryptocurrency market in the near term is likely to be tactical, rather than signaling the start of a new long-term bullish uptrend. Analysts attribute this to Bitcoin’s current price, which is considered too high relative to its production cost of $43,000 and its volatility-adjusted comparison to gold at $53,000. Bitcoin was trading around $67,220 at the time of the report.

Impact of Liquidations

Bitcoin futures have seen weak momentum in recent weeks due to liquidations by creditors of Gemini, Mt. Gox, and the German government. These liquidations are expected to subside soon, but they have contributed to the current market conditions. JPMorgan anticipates a rebound in Chicago Mercantile Exchange （CME） Bitcoin futures positioning into August.

Potential Benefits of a Trump Victory

JPMorgan analysts suggest that both Bitcoin and gold could benefit from the higher likelihood of Donald Trump winning the 2024 presidential election. A second Trump presidency is viewed by some investors as more favorable towards crypto companies and regulations compared to the current Biden administration. There is also speculation that Trump could announce Bitcoin as a strategic reserve asset at the upcoming Nashville Bitcoin conference, potentially triggering a parabolic rise in Bitcoin’s price.

Conclusion

While JPMorgan predicts a near-term tactical rebound in the cryptocurrency market, the outlook for a new long-term bullish trend remains uncertain. Factors such as liquidations and regulatory developments will play crucial roles in shaping the market’s future. Investors should stay informed about these dynamics to make strategic decisions.