JPMorgan: Short-term future of Bitcoin (BTC) still unclear
In a note, the American bank JPMorgan has indicated that Bitcoin (BTC) and crypto more generally have just begun the healing process.
Bitcoin and crypto at the beginning of their healing process
Ranging between $30,000 and $35,000 lately, Bitcoin is still in a phase of uncertainty: something that goes for the entire cryptocurrency sector too.
As a result, for JPMorgan analysts the cryptocurrency market is not yet healthy. On the contrary, they warn that the market is in a particularly tough spot in the short term and that there is probably still an overhang of underwater positions that need to be compensated by the market.
The cryptocurrency market is still particularly unstable. For JPMorgan, the market has just begun its healing process.
The effects of China’s repressive policy?
For Bitcoin, after experiencing an all-time high in March 2021, the fall was brutal when it fell below $30,000 during the month of June.
One of the reasons for this price drop is China’s repressive policy against cryptocurrencies. In recent months, China, which had already shown hostility several times, has accelerated its crackdown. In particular, mining companies have been forced to close one after the other.
Inevitably, when the country with the largest hashing capacity reduces this capacity by almost 90%, the whole market is worried. This translates to a fall in the price of cryptocurrencies.
However, since its beginnings, Bitcoin has experienced periods of sharp rises and falls. Like the cryptocurrency market as a whole, BTC remains highly volatile. The difficult period that digital assets are going through cannot therefore be attributed solely to China.
In addition, JPMorgan believes that the migration of Chinese miners to other countries should ultimately have a positive effect. This migration will lead to an increase in BTC mining costs, something that will serve as support for the price. Historically, the price of Bitcoin has always been linked to its mining cost.
While JPMorgan is calling for caution in the short term, the US bank does not seem to question the ability of the cryptocurrency market to regain its splendor once the healing process is over.
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The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.