JPMorgan Predicts Crypto Market Rebound in August as Liquidations Conclude

JPMorgan has forecasted a crypto market rebound starting in August following a month of significant liquidations. In its recent research report, the bank has adjusted its year-to-date net flow estimate for the crypto market to $8 billion, down from the previous $12 billion estimate. This revision is attributed to a decline in bitcoin reserves across exchanges, driven by liquidations by creditors of Gemini and the defunct Mt. Gox, as well as the German government's sale of seized crypto assets.

The report, led by analyst Nikolaos Panigirtzoglou, indicates that the decrease in reserves reflects these liquidations. Despite the downturn, the crypto market is expected to recover from August onward. JPMorgan's revised net flow estimate includes a $14 billion net inflow into crypto funds by July 9, $5 billion from CME futures flows, and $5.7 billion raised by crypto venture capital funds. However, this is offset by a $17 billion adjustment due to the rotation from wallets on exchanges to new spot bitcoin ETFs.

The Wall Street firm remains cautious about its previous estimate, noting that bitcoin's high value relative to its production cost and the price of gold may have been overly optimistic for sustained net flows for the rest of the year.