JPMorgan analysts questioned whether the recovery in cryptocurrency markets was sustainable, noting that prices may rise temporarily rather than begin an enduring uptrend. In a report posted last Thursday, they emphasized several things:
- The disparity between Bitcoin’s current price of approximately $67,500 and its production cost of around $43,000.
- Bitcoin’s volatility-adjusted value compared to gold, indicates a value of around $53,000.
- Ongoing market liquidations by entities like Gemini, Mt. Gox creditors, and the German government’s sale of seized Bitcoins.
Current Market Dynamics
The analysts said that recent declines in Bitcoin futures were due to ongoing liquidation in the cryptocurrency market but they are hopeful that after July there will be fewer liquidations hence a recovery in bitcoin futures from August which rhymes with increasing gold futures as observed.
Bitcoin’s Volatility and Market Factors
After the recent Bitcoin Crash, the Bitcoins volatility of Bitcoin is a big worry. Despite huge selloffs, the signal can be seen which indicates a possible turnaround. The last month has witnessed a decline in the number of Bitcoin wallet addresses with BTC. Initially, this may look worrying but it might be an indication that the strong holders are staying while the rest of them are being shaken off.
According to an on-chain analytics firm by the name of Santiment, mass liquidations are said to increase the likelihood that a rebound will be ongoing whilst over-the-counter (OTC) markets now reign supreme over centralized exchanges showing institutional buying.
Per suggestions from Santiment, mass liquidations serve as signals pointing out possible rebounds. Over-the-counter (OTC) markets dominate centralized exchanges currently, which possibly means that institutional investors are accumulating more digital assets behalf.
Conclusion
The JPMorgan analysts have reservations concerning the persistence of the current rally in virtual currencies. They point to huge price swings and market dynamics that could hinder profits in the future. When investing in digital assets, investors are encouraged to be more careful by regarding the overall market forces.
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