Cryptocurrency markets face potential downside risk in July due to expected selling pressure from the creditors of the defunct bitcoin exchange, Mt. Gox. JPMorgan’s recent research report highlighted concerns regarding market instability.
The trustee of Mt. Gox announced plans to make repayments to creditors in July. This news raised worries in the crypto community as some creditors might sell their bitcoin holdings immediately upon receiving them. The total amount set to be repaid is 142,000 bitcoins, valued at approximately $9 billion.
JPMorgan pointed out the recent behavior of Gemini creditors who seemingly liquidated a portion of their crypto assets after receiving them in the past weeks. This trend has added to the apprehension surrounding potential Mt. Gox creditor sales in July.
While the deadline for Mt. Gox creditor repayments extends to October, most reimbursements are anticipated to occur in July. If a significant number of Mt. Gox creditors decide to sell their bitcoins during this time, a market sell-off is expected next month, followed by a potential rebound in August.
Additionally, cash payments to creditors of another bankrupt exchange, FTX, are foreseen post-October 7. This could provide support to the markets. However, a gap of about three months exists between potential Mt. Gox creditor sales and FTX creditor reinvestments later in the year, as highlighted by JPMorgan’s report.
Overall, the cryptocurrency market is poised for volatility in the coming months, influenced by creditor actions and repayment schedules of bankrupt exchanges.
Read more: Mt. Gox to Begin Repayments in July; BTC Slides Under $61K