JPMorgan Predicts Temporary Bitcoin Recovery Amid Market Volatility

• The crypto market, led by the flagship cryptocurrency Bitcoin, has embarked on yet another upward swing.
• However, analysts from JPMorgan predict that any recovery in the cryptocurrency market may not be sustained for long.
• They also suggest that both Bitcoin and gold could potentially benefit from a second Donald Trump presidency.

Find out why the latest crypto rally may be short-lived and how political shifts might shape the future of Bitcoin and gold.

Bitcoin and Altcoin Price Surge: A Temporary Upswing?

The cryptocurrency market experienced a significant upward momentum last week, yet there is ongoing uncertainty about the durability of this trend. Analysts at JPMorgan caution that any price rebound from this point forward is more likely to be tactical rather than a sustainable upward trajectory. In their assessment, Bitcoin’s recent peak near $67,500 appeared overstated compared to its production cost of approximately $43,000, and its volatility-adjusted comparison with gold, which hovers around $53,000.

Factors Contributing to Uncertainty in Crypto Price Stability

Nikolaos Panigirtzoglou, along with other JPMorgan analysts, in a report published on Thursday, noted that the divergence between Bitcoin’s price and JPMorgan’s volatility-adjusted gold comparison suggests a mean reversion around the zero line. This implies constrained long-term potential for Bitcoin’s price appreciation. Analysts reiterated that a true sustained recovery in cryptocurrency prices might not occur until at least August, following a decrease in liquidations post-July.

Expectations for a Crypto Recovery by August

The analysts highlighted the impact of recent liquidations on Bitcoin futures, including those linked to Gemini and Mt. Gox creditors, as well as the German government’s sale of confiscated BTC. They anticipate these liquidations to diminish after July, paving the way for a likely recovery in Bitcoin futures by August. This recovery is expected to align with recent surges in gold futures. According to the analysts, momentum traders, such as commodity trading advisors (CTAs), have played a significant role in the gold futures market. They observed that momentum signals for gold approached overbought levels in April.

A Second Trump Presidency and Its Impact on Crypto and Gold

JPMorgan’s analysts provide insights on how a potential second term for Donald Trump might favor Bitcoin and gold. They argue that some investors view Trump as more favorable to cryptocurrency companies and regulations compared to the current Biden administration. Trump’s potential trade policies could also drive central banks in emerging markets, particularly China’s central bank, to increase their gold reserves.

Conclusion

In conclusion, while the crypto market has shown recent strength, JPMorgan analysts urge caution, suggesting that any near-term price recovery might be temporary. Moreover, the potential political landscape shaped by a second Trump presidency could have considerable implications for both Bitcoin and gold. As the market continues to evolve, investors are advised to stay informed and cautious.

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