JPMorgan says crypto rebounds ahead unlikely to be sustained

JPMorgan analysts say that any rebound in crypto prices from this point is likely to be tactical — temporary and strategic — rather than the start of a lasting upward trend. They note that bitcoin’s current price of around $67,500 is high compared to its production cost of about $43,000 and its volatility-adjusted comparison to gold, which is around $53,000.

The difference between bitcoin’s price and JPMorgan’s volatility-adjusted comparison to gold “points to mean reversion around the zero line, thus constraining any upside potential for bitcoin prices over the longer term,” JPMorgan analysts, led by managing director Nikolaos Panigirtzoglou, wrote in a report on Thursday.

The analysts reiterated that crypto rebounds are expected from August onwards as liquidations decrease after July. They noted that bitcoin futures have recently been weak due to liquidations by Gemini and Mt. Gox creditors, as well as the German government selling seized bitcoins. The analysts say these liquidations will likely subside after July and expect a rebound in bitcoin futures from August, aligning with recent increases in gold futures.

“We believe that momentum traders such as CTAs [commodity trading advisors] have played a big role in the gold futures impulse,” the analysts said. “The momentum signal for gold spiked in July towards the previous overbought territory of last April.”

JPMorgan on potential second Trump presidency

Bitcoin and gold are expected to benefit from a potential second Donald Trump presidency, according to JPMorgan analysts. Some investors view Trump as more favorable for crypto companies and regulations than the current Biden administration, the analysts said. They added that Trump’s potential trade policies could lead to increased diversification into gold by emerging market central banks, especially China’s central bank.