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Global investment bank JPMorgan has predicted a crypto market recovery beginning in August. The firm revised its year-to-date crypto net flow estimate from $12 billion to $8 billion, citing bitcoin liquidations by Mt. Gox creditors and the German government’s seized asset sales as contributing factors. JPMorgan’s analysts believe this revised net flow will stabilize the market as exchange reserves dwindle.
Global investment bank JPMorgan anticipates a reduction in crypto liquidations this month, with the market expected to recover starting in August, according to the firm’s Wednesday research report. JPMorgan revised its year-to-date crypto net flow estimate down from $12 billion to $8 billion. The bank’s analysts, led by managing director and global strategist Nikolaos Panigirtzoglou, explained:
The reduction in the estimated net flow is largely driven by the decline in bitcoin reserves across exchanges over the past month.
The analysts attribute this decline to bitcoin liquidations by creditors of the now-defunct Mt. Gox exchange, Gemini creditors, and sales by the German government of seized assets.
The German government has recently been active in liquidating seized bitcoin. By Thursday morning, the German government’s bitcoin stash had decreased from 13,110 BTC on Wednesday to 9,925 BTC. Simultaneously, Mt. Gox’s Rehabilitation Trustee announced the start of bitcoin repayments to creditors last week. Mt. Gox, once the largest bitcoin exchange, collapsed in 2014 after a massive hack that resulted in the loss of 850,000 bitcoins. After 10 years, the Mt. Gox Trustee said it has begun distributing approximately $9 billion worth of bitcoin (BTC) and $50.8 million in bitcoin cash (BCH) to creditors.
The revised estimate by JPMorgan of $8 billion comprises $14 billion in net flows into crypto funds, $5 billion from Chicago Mercantile Exchange (CME) futures, and $5.7 billion from crypto venture capital funds. This total is adjusted by $17 billion to account for the shift from exchange wallets to new spot bitcoin exchange-traded funds (ETFs).
JPMorgan’s skepticism about the initial $12 billion estimate stemmed partly from bitcoin’s high value relative to its production cost and gold price. In June, the bank questioned the sustainability of the $12 billion crypto inflows, expressing doubts about the crypto industry’s outlook.
