According to JPMorgan analysts, any recent rebound in cryptocurrency prices should be viewed as tactical rather than the start of a lasting upward trend.
The analysts cast doubt on the sustainability of the current crypto market recovery, suggesting that the surge in prices may be temporary.
In a report released on Thursday, the analysts highlighted the disparity between Bitcoin’s current price of approximately $67,500 and its production cost of around $43,000.
Bitcoin’s Volatility-Adjusted Value to Gold Indicates $53,000
They also compared Bitcoin’s volatility-adjusted value to gold, which indicated a value of around $53,000.
This significant difference, according to JPMorgan, suggests a mean reversion around the zero line, limiting the potential for significant upside in Bitcoin prices over the long term.
The analysts noted that the current liquidations in the crypto market, including those by Gemini, Mt. Gox creditors, and the German government’s sale of seized Bitcoins, have contributed to the recent weakness in Bitcoin futures.
However, they anticipate a decrease in liquidations after July, leading to a rebound in Bitcoin futures from August.
This projection aligns with the observed increase in gold futures.
Interestingly, JPMorgan analysts also suggested that both Bitcoin and gold could benefit from the potential re-election of former President Donald Trump.
They explained that some investors perceive Trump as more favorable towards crypto companies and regulations compared to the current Biden administration.
Furthermore, Trump’s potential trade policies could prompt emerging market central banks, particularly China’s central bank, to diversify their holdings by increasing their investments in gold.
This comes as Trump has seen growing popularity among the crypto community comes as his stance on cryptocurrencies has changed radically as of late.
The former president has even criticized Biden for his harsh stance on cryptocurrencies, emphasizing that the United States should strive to be a leader in the crypto industry.
Bitcoin Addresses Decline, Indicating Potential Rebound
As reported, the number of Bitcoin wallet addresses holding BTC has been decreasing over the past month, according to data from onchain analytics firm Santiment.
While this may initially seem concerning, Santiment suggests that it could actually be good news for investors.
“When we see mass liquidations like this, the probability of a continued rebound only increases,” the firm wrote.
Meanwhile, there has also been a decline in the percentage of Bitcoin supply in profit, currently standing at 89.43% according to Glassnode data.
While this might appear discouraging, other metrics paint a more bullish picture.
In a recent post, CryptoQuant founder Ki Young Ju noted that over-the-counter (OTC) markets are dominating centralized exchange markets, indicating institutional accumulation.
Large whale wallets, including spot ETFs and custodial wallets, have acquired 1.45 million BTC this year, totaling approximately 9% of the circulating supply.
The weekly inflow to these whale entities has surpassed the total for the entire year of 2021, with an impressive 100,000 BTC flowing in each week.
Despite a decline in trading volume on centralized crypto exchanges for the third consecutive month, Bitcoin spot markets have experienced a recovery, gaining 12% over the past seven days.
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