Cryptocurrency Markets Facing Downside Risk in July

Cryptocurrency markets are at risk of facing downside pressure in July as the creditors of the defunct bitcoin exchange Mt. Gox are expected to make repayments during this month, according to a recent research report by JPMorgan.

The trustee of Mt. Gox exchange recently announced plans to make repayments to creditors, leading to concerns in the crypto markets that some creditors might sell off their bitcoin holdings once they receive them. Creditors are set to receive 142,000 bitcoins valued at approximately $9 billion based on current prices.

JPMorgan analysts, led by Nikolaos Panigirtzoglou, expressed concerns about the potential impact of these repayments on the cryptocurrency markets. They pointed out that the recent behavior of Gemini creditors, who are assumed to have sold off part of their crypto assets after receiving them, has added to these fears. Gemini had announced on May 29 that its users had received all their digital assets back in-kind.

While there is an October deadline for the repayment to Mt. Gox creditors, most of the reimbursements are expected to take place in July. If a significant amount of selling by Mt. Gox creditors occurs next month, the crypto markets are likely to experience a sell-off followed by a rebound in August, as outlined in the JPMorgan report.

Furthermore, the report highlighted that cash payments to creditors of the bankrupt crypto exchange FTX are anticipated after October 7. Although these payments could provide some support to the markets, there is a gap of approximately three months between the potential selling by Mt. Gox creditors and the reinvestment by FTX creditors later in the year.

Read more: Mt. Gox to Begin Repayments in July; BTC Slides Under $61K