JPMorgan: Mt. Gox Creditors’ Actions to Apply Selling Pressure on Crypto Markets in July
Crypto News- Cryptocurrency markets are expected to face significant downside risk in July, stemming from potential selling pressure by creditors of the defunct bitcoin (BTC) exchange Mt. Gox, according to a research report by JPMorgan (JPM) released on Wednesday.
Concerns Over Market Impact
Earlier this week, the trustee of Mt. Gox announced plans to begin repayments to creditors in July. This announcement has stirred unease in the crypto markets, with fears that some creditors might quickly sell off their bitcoin holdings as soon as they receive them. These creditors are set to receive 142,000 bitcoin, currently valued at around $9 billion.
Historical Context: Gemini Creditors’ Behavior
“This fear is justified given the recent behavior of Gemini creditors, who are believed to have liquidated part of the crypto assets they received in recent weeks,” stated analysts led by Nikolaos Panigirtzoglou.
JPMorgan highlighted that the negative price movements in the crypto markets since May 29th suggest that some Gemini creditors, mostly retail customers, have taken partial profits recently. On May 29, Gemini announced that its Gemini Earn users had received all their digital assets back in-kind following a settlement with Genesis.
Timeline and Market Reactions
While there is an official deadline in October for Mt. Gox creditor repayments, most reimbursements are expected to occur in July. If the majority of these liquidations happen in July, the crypto markets might experience a sell-off next month, potentially rebounding in August, the report suggests.
Future Market Support from FTX Creditors
Looking further ahead, cash payments to creditors of the bankrupt crypto exchange FTX, expected sometime after October 7, could provide support to the markets. However, the report points out a concern: there will be a three-month gap between the potential Mt. Gox creditor sell-off and the reinvestment from FTX creditors later in the year.
FAQ: Impact of Mt. Gox Creditors on Crypto Markets
Why is there expected to be selling pressure in the crypto markets in July?
Selling pressure is anticipated due to the scheduled repayments to Mt. Gox creditors in July. These creditors are expected to receive 142,000 bitcoin, currently valued at around $9 billion. There are concerns that some creditors may sell their bitcoin immediately upon receipt, causing a downturn in the market.
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