JPMorgan said crypto markets are faced with downside risk due to potential selling pressure from Mt. Gox creditors in July.
Creditors are set to receive 142K bitcoin and there are concerns that some will dump their tokens as soon as they receive them, the report said.
The bank said crypto markets are expected to rebound in August.
Cryptocurrency markets are faced with downside risk in July due to potential selling pressure from the creditors of defunct bitcoin (BTC) exchange Mt. Gox, JPMorgan (JPM) said in a research report on Wednesday.
The trustee of Mt.Gox exchange said earlier this week that it would make repayments to creditors in July. JPMorgan notes that the announcement unsettled crypto markets due to concerns that some creditors will dump their bitcoin in July as soon as they receive them. Creditors are set to receive 142,000 bitcoin worth about $9 billion at current prices.
“This fear is justified given the recent behavior of Gemini creditors which are assumed to have liquidated part of the crypto assets received in recent weeks,” analysts led by Nikolaos Panigirtzoglou wrote.
The bank said by looking at the negative price action in crypto markets since May 29th, it is “fair to assume that some of Gemini creditors, which are mostly retail customers, have taken at least partial profit in recent weeks.” Gemini announced on May 29 that its Gemini Earn users had received all their digital assets back in-kind, following its settlement with Genesis.
JPMorgan notes that while there is an October deadline for repayment to Mt Gox. creditors, most of the reimbursements are expected to happen in July.
If most of the liquidations by Mt. Gox creditors do occur in July, crypto markets are expected to sell off next month then rebound in August, the report said.
Cash payments to creditors of bankrupt crypto exchange FTX, expected some time after October 7, could support markets but the problem is that there is a gap of about three months between potential Mt. Gox creditor selling and FTX creditor reinvestment later in the year, the report added.
