Bitcoin

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<p>A report by JP Morgan reveals shocking research. Analysts at the top firm believe Bitcoin is overpriced compared with its production cost($47k) and gold. The report further argues that the rebound in the price of Bitcoin might not be sustained in the near future, implying an imminent crash.</p>
<p>Bitcoin recently posted a strong recovery from <a href="https://www.thecoinrepublic.com/2024/07/18/can-2-billion-inflow-push-bitcoin-price-beyond-70k-levels/" rel="noopener noreferrer nofollow">$53.7k to $67k</a> after the German government completed its sale of $3 billion worth of Bitcoins. However, there is another upcoming selloff in which Mt. Gox users will receive a total of 90,000 Bitcoins.</p>
<h2 class="wp-block-heading" id="h-is-another-bitcoin-crash-approaching"><strong>Is Another Bitcoin Crash Approaching</strong></h2>
<p>JP Morgan has predicted another upcoming crash after Bitcoin recovers to the price level of $67k.&nbsp;</p>
<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/docsz/AD_4nXf_wLV3BbvaGqwmLQFaJglIqiMFxHeeM_bHCiCVrb3GWjPToV2lHdY6RASkJmggkssfDBhIxdM1GDvF-vMWsKRuRJIFQzfRteMrhalOng7HT7jEWtneCfTgOQycyCUjS---7e1eHviQHuTHsmyLU7wEBhUU?key=mHKS7y4phnGyEDR66pjkYg" alt="Bitcoin">
 <figcaption class="wp-element-caption">
  Bitcoin Price Trend in June – July 2024, Source: CoinMarketCap.com&nbsp;
 </figcaption>
</figure>
<p>Earlier this month, on 5 July, Bitcoin touched a low of $53,717 due to intense selling by the German government. The government had decided to sell off its entire $3 billion Bitcoin stash that it seized from various sources. Due to the lack of liquidity at that time, the crypto entered a major correction phase.&nbsp;</p>
<p>Bitcoin then recovered to a high of $68,480 on 22 July 2024. At press time, it was trading at $67,622.</p>
<p>The report believes the ongoing recovery rally will not be sustained in the near term for three main reasons.&nbsp;</p>
<h3 class="wp-block-heading" id="h-upcoming-bitcoin-sales-by-mt-gox-users"><strong>Upcoming Bitcoin Sales by Mt. Gox Users</strong></h3>
<p>Firstly, the upcoming sales by <a href="https://www.thecoinrepublic.com/2024/07/16/mt-gox-wallet-moves-2-8-billion-in-bitcoin-sparks-market-concerns/" rel="noopener noreferrer nofollow">Mt. Gox</a> users aim to offload a much larger Bitcoin reserved in the market: 90,000 Bitcoins priced at $6.08 billion. This figure is almost twice that of the German government.</p>
<h3 class="wp-block-heading" id="h-report-says-bitcoin-is-overpriced"><strong>Report Says Bitcoin is Overpriced</strong></h3>
<p>The second reason in the report was that Bitcoin was overpriced at its current levels. The report notes that as compared to Gold, Bitcoin should be near $53k, much lower than its current price level, i.e., $67k at press time.</p>
<p>The third and final reason was that Bitcoin was still overpriced compared to its <a href="https://www.thecoinrepublic.com/2023/08/21/avg-cost-of-bitcoin-mining-is-35-more-than-btc-price-report/" rel="noopener noreferrer nofollow">production/mining cost</a> of $47,000.</p>
<p>We would like to clarify that Bitcoin’s mining cost/production cost is unequal for all miners, and any fixed price, even for reference, would be grossly mis-valued.</p>
<h2 class="wp-block-heading" id="h-weak-momentum-in-bitcoin-futures"><strong>Weak Momentum in Bitcoin Futures</strong></h2>
<p>The report also indicates that Bitcoin derivates have been weak due to the expected sales by Mt. Gox users.</p>
<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/docsz/AD_4nXe3rQUL9MeGGIjLvUFmsHHsH3MMTJ6HzTQS4pyAw4QRdsbrghANXFls4ZW5ZyVNiCpK7PUTr4xUX2Cme4ezhkiq_xWwkbvx0uWT9tuJHXiUpYXd7iAWHU2jouBV40xqO91_J29EabvWzx0-mndzJsKrJ7vb?key=mHKS7y4phnGyEDR66pjkYg" alt="Bitcoin">
 <figcaption class="wp-element-caption">
  Bitcoin Futures Witness Highest OI in 2024, Source: Coinglass
 </figcaption>
</figure>
<p>However, our findings narrated a different story. On 21 July 2024, Bitcoin Futures had the highest open interest in 2024 at $36.4 billion.</p>
<h2 class="wp-block-heading" id="h-criticism-of-the-report"><strong>Criticism of The Report</strong></h2>
<p>There is much doubt about the methods used to find whether Bitcoin is overpriced by comparing it to Gold or Mining costs. Both factors do not play any role in deciding the price of Bitcoin. The price of Bitcoin is entirely based on its demand and supply.</p>
<p>Gold and Bitcoin have long decoupled. Both belong to different asset classes and cater to other investors. Conservative investors traditionally buy gold, while high-risk investors buy Bitcoin.</p>
<p>Also, Bitcoin’s mining cost has never impacted its price. Several times, when the cost of mining was higher than Bitcoin’s price, the miners had incurred losses. Similarly, miners profit if mining costs are lower than Bitcoin’s price.</p>
<p>However, one aspect of the report is widely known. Mt. Gox users waiting for their lost Bitcoins will be tempted to sell. At the time of the hack, Bitcoin was priced around $300 to $350. At press time, Bitcoin is priced at $67,000, more than 223 times higher than when they had lost their Bitcoins.</p>
<h2 class="wp-block-heading" id="h-critical-price-levels"><strong>Critical Price Levels</strong></h2>
<p>In the worst-case scenario, Bitcoin’s price could fall to $45,000 if Mt. Gox users sell the entire $6 billion stash.</p>
<p>Even if the Bitcoin ETFs and the market come to the rescue, we still expect a fall to $50,000.&nbsp;</p>
<p>Currently, Bitcoin faces support at $62,500, followed by $58,000 and then $53,900. On the upside, the near-term resistances are $70,000 and $73,700.</p>
<p>The post <a href="https://www.thecoinrepublic.com/2024/07/22/jp-morgan-believes-bitcoin-is-overpriced-sees-imminent-crash/" rel="noopener noreferrer nofollow">JP Morgan Believes Bitcoin is Overpriced, Sees Imminent Crash</a> appeared first on <a href="https://www.thecoinrepublic.com" rel="noopener noreferrer nofollow">The Coin Republic</a>.</p>

JP Morgan Believes Bitcoin is Overpriced, Sees Imminent Crash

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