According to JPMorgan analysts, any recent rebound in cryptocurrency prices should be seen as tactical, rather than the beginning of a sustained upward trend. The analysts question the sustainability of the current recovery in the cryptocurrency market, suggesting that the price increase may be temporary.
In a report published Thursday, analysts highlighted the discrepancy between Bitcoin’s current price of around $67,500 and its production cost of around $43,000.
Bitcoin’s volatility-adjusted value against gold indicates $53,000
They also compared Bitcoin’s volatility-adjusted value to gold, which indicated a value of around $53,000. According to JPMorgan, this significant difference suggests a mean bounce around the zero line, limiting the potential for a significant increase in Bitcoin’s price in the long term.
Analysts noted that current liquidations in the cryptocurrency market, including those by creditors of Gemini, Mt.Gox and the sale of seized Bitcoin by the German government, have contributed to the recent weakening of Bitcoin futures.
However, they predict a decline in liquidations after July, leading to a rebound in Bitcoin futures from August. This projection is in line with the observed rise in gold futures prices.
Interestingly, JPMorgan analysts also suggested that both bitcoin and gold could gain from the potential re-election of former President Donald Trump. They explained that some investors perceive Trump as more sympathetic to cryptocurrency companies and regulation compared to the current Biden administration.
What’s more, Trump’s potential trade policies could prompt emerging market central banks, particularly China’s central bank, to diversify their holdings by increasing investment in gold.
This comes after Trump noted the growing popularity among the cryptocurrency community when his stance on cryptocurrencies changed dramatically recently. The former president even criticized Biden for his harsh stance on cryptocurrencies, stressing that the United States should strive to be a leader in the cryptocurrency industry.
Bitcoin addresses decline, pointing to potential rebound
As reported, the number of Bitcoin wallet addresses holding BTC has been falling over the past month, according to data from analyst firm Santiment . While this may initially seem worrisome, Santiment suggests that it could actually be good news for investors.
“When we see these types of mass liquidations, the likelihood of a further rebound only increases,” the company wrote.
Meanwhile, there has also been a decline in Bitcoin’s percentage of supply gains, which now stands at 89.43%, according to Glassnode data. While this may seem discouraging, other indicators paint a more optimistic picture.
In a recent post, CryptoQuant founder Ki Young Ju noted that over-the-counter (OTC) markets dominate centralized exchange markets, indicating institutional accumulation. Large whale portfolios, including ETFs and depository portfolios, have purchased 1.45 million BTC this year , totaling about 9% of the circulating supply.
Weekly inflows into these whales exceeded the total for all of 2021, with an impressive 100,000 BTC inflows each week. Despite a drop in trading volume on centralized cryptocurrency exchanges for the third consecutive month, bitcoin markets experienced a recovery, gaining 12% over the past seven days.
