JPMorgan Expects MtGox-based Selloff in July

By Mark Hunter

19 hours agoFri Jun 28 2024 09:54:24


Reading Time: 2 minutes

  • JPMorgan analysts have predicted a July selloff in crypto markets due to MtGox holders selling their repatriated holdings
  • 142,000 Bitcoins, valued at $9 billion, have been set to be returned to MtGox customers after a ten-year wait
  • The actions of Gemini creditors have been seen as a precursor to the expected MtGox payouts, according to JPMorgan analysts

JPMorgan analysts believe that the crypto markets will face a selloff in July sparked by MtGox holders selling their recently repatriated holdings. 142,000 Bitcoins, valued at approximately $9 billion based on current prices, are set to be returned to MtGox customers next month following a ten-year wait, with the news alone sparking a drop in Bitcoin’s price. JPMorgan analysts, led by Nikolaos Panigirtzoglou, claim that the actions of Gemini creditors, who are thought to have sold many of their holdings, is a precursor to what will happen with the MtGox payouts.

JPMorgan Points to Gemini Creditor Activity

The trustee of MtGox announced earlier this week that repayments to long-suffering creditors would commence in July, news which unsettled the crypto markets, raising concerns that some creditors may offload their Bitcoin holdings as soon as they receive them.

Panigirtzoglou and his team highlighted the market’s apprehension over the imminent arrival of $9 billion worth of liquidity, comparing the recent actions of Gemini creditors to what might happen with MtGox creditors:

This fear is justified given the recent behavior of Gemini creditors, who are assumed to have liquidated part of the crypto assets received in recent weeks.

Panigirtzoglou pointed to the negative price movements in the crypto markets since May 29, sparked, he said, by Gemini creditors who have taken at least partial profits following the recent settlement with Genesis. This settlement saw $1.8 billion worth of assets returned to Gemini Earn customers following a lengthy legal battle.

FTX Payouts Could Add Buoyancy

The report also notes that while the final deadline for repayments to MtGox creditors is in October, the bulk of the reimbursements are anticipated to occur in July. This timing raises the likelihood of a market sell-off next month, with a potential rebound expected in August, although the exchanges to which the payouts are being sent will have to process the payouts before sending them out. To make things easier, they may choose to do this in batches, stretching out the timeframe.

Adding to the complexity, cash payments to the creditors of the bankrupt crypto exchange FTX are expected sometime after October 7, which JPMorgan says could provide support to the markets. However, the bank noted that there is an approximately three-month period between the potential sell-off by MtGox creditors and the reinvestment by FTX creditors, which could result in a period of sustained market pressure before any recovery.

Related Articles

Back to top button