JPMorgan thinks any bounce-back in the crypto market soon is just a short-term move and not the start of a long-term upward trend. The bank’s latest research report gave several reasons why they believe this.
The report pointed out that the price of Bitcoin is currently too high compared to its production cost, which is around $43,000. Bitcoin was trading at about $67,220 when the report was released.
JPMorgan analysts noted that Bitcoin’s price is also high when compared to its volatility-adjusted price relative to gold, which stands at $53,000.
Liquidations and market momentum
One reason for the weak momentum in Bitcoin futures has been the recent liquidations by creditors of Gemini, Mt. Gox, and the German government. These liquidations have been putting pressure on the market.
However, JPMorgan expects these liquidations to wind down this month, which might give some temporary relief. The bank is also looking for a rebound in the positioning of Chicago Mercantile Exchange (CME) Bitcoin futures as we move into August.
Related: JPMorgan says Bitcoin will make a bullish comeback in August
They believe this could provide some short-term support to the market. The bank also pointed out that both Bitcoin and gold are likely to benefit if former President Donald Trump wins the next election. JPMorgan said:
“A second Trump presidency is seen by some investors as more friendly towards crypto companies and towards crypto regulations, in contrast to the current Biden administration.”
Jamie Dimon’s weird relationship with crypto
Jamie Dimon, the CEO of JPMorgan, has been a consistent critic of cryptocurrencies, especially Bitcoin since at least 2014. He has often questioned the fundamental value and utility of cryptocurrencies.
Jamie has referred to Bitcoin as a “pet rock” and a “hyped-up fraud.” In 2017, he called Bitcoin a “fraud” and compared it to the tulip bulb bubble. His criticisms also include the potential for cryptocurrencies to be used in illegal activities.
He has repeatedly pointed out the use of cryptocurrencies in fraud, anti-money laundering, tax avoidance, and sex trafficking.
Jamie estimates these illicit uses account for $50-100 billion in annual transactions, so he has been a strong advocate for strict regulation of the cryptocurrency industry. During a Senate hearing in 2023, he said if he were in charge, he would “close it down.”
Despite his criticism of cryptocurrencies, Jamie sees value in the blockchain. He acknowledges blockchain’s potential for efficient movement of money and data.
JPMorgan has even embraced blockchain technology through initiatives like the JPM Coin, a dollar-backed digital currency for client transactions.
Interestingly, President Donald Trump has said that Jamie has softened his stance on cryptocurrencies. Trump said, “You ask Jamie Dimon. Jamie was, you know, very negative and now all of a sudden he’s changed his tune a little bit.”
