[JPMorgan Chase: The cryptocurrency market will face selling pressure from Mt. Gox creditors in July]
The crypto market faces downside risks as creditors of collapsed Bitcoin exchange Mt. Gox may sell Bitcoin (BTC) in July, according to a new report from JPMorgan. The report states that creditors will receive 142,000 Bitcoins, currently worth about $9 billion, and the market is worried that some creditors will sell the tokens immediately after receiving them, thus putting pressure on the market.
A research note from JPMorgan on Wednesday highlighted that Mt. Gox's trustees will repay creditors in July. The news sparked anxiety in the crypto market amid concerns that some creditors would sell their Bitcoins as soon as they received them. The analyst team, led by Nikolaos Panigirtzoglou, mentioned that this concern is legitimate as Gemini creditors have liquidated some of the crypto assets they received in recent weeks.
The report states that the negative price action in the crypto market since May 29 may be related to the actions of Gemini’s creditors. Gemini announced at the end of May that Gemini Earn users had recovered all their digital assets, which may have caused some creditors to take profits.
Although Mt. Gox's creditors have an October repayment deadline, most repayments are expected to occur in July. If these creditors sell off massively, the crypto market is expected to see selling pressure in July, but is expected to rebound in August.
JPMorgan also mentioned that expected cash payments to creditors of bankrupt crypto exchange FTX after October 7 could support the market. However, with a gap of about three months between a possible sell-off by Mt. Gox creditors and reinvestment by FTX creditors, uncertainty remains about market conditions during this time.
Overall, JPMorgan’s report points out the significant impact that Mt. Gox’s creditor repayments could have on the crypto market and highlights short-term market risks and the possibility of a potential rebound.