Bitcoin rebounds to the $60,000 mark, but JPMorgan Chase remains cautious

On Friday, despite Bitcoin's sharp rebound and returning above the $60,000 mark, JPMorgan Chase believes that most of the catalysts that could drive up the prices of Bitcoin and the broader cryptocurrency market have actually been priced in.

The bank's analysts wrote that the prices of these digital assets experienced the largest sell-off since the 2022 FTX collapse earlier this week, primarily influenced by the spread of traditional markets, with Bitcoin dropping over 15% before rebounding. The bank stated that the cryptocurrency sell-off was mainly driven by retail investors, with momentum traders exacerbating the sell-off by exiting long positions and establishing short positions.

After the Bank of Japan raised interest rates last week, causing the yen to strengthen and leading to a reversal in "carry trades," the market saw a significant pullback. While both traditional and digital asset markets have since stabilized, many traders remain concerned.

Analysts noted that at the same time, institutional investors have shown limited, if any, "de-risking" in the Bitcoin futures market.

The JPMorgan Chase team pointed out that there are some factors that could keep institutional investors optimistic about Bitcoin and the crypto industry, including Morgan Stanley offering cryptocurrencies to its clients, the impending conclusion of Mt. Gox's bankruptcy repayment, and favorable regulatory indications from both US political parties.

However, the bank stated that these positive catalysts seem to have already been factored into current digital asset prices. "Given the limited de-risking in the CME Bitcoin futures market and the still fragile appearance of the US stock market... despite the recent pullback, we remain cautious on the crypto market."

JPMorgan Chase's cautious comments are not new, as the bank recently stated that any short-term rebounds in the crypto market could be short-lived, as Bitcoin's price remains relatively high compared to its production cost and relative to gold.

The bank's analysts currently estimate that the average production cost for Bitcoin miners is around $49,000 per coin, and any price action below this level would put pressure on miners, further suppressing Bitcoin prices.

Due to the "halving" in April leading to a significant reduction in miner revenue, the amount of Bitcoin reserves they currently hold has dropped to the lowest level in three years.

According to a report from the crypto research firm Kaiko, as of August 3rd, the total amount of Bitcoin held by miners has decreased to around 1,510,300 coins, a 2.4% drop from the peak in December 2020. Based on recent prices, these Bitcoins are valued at around $86 billion, accounting for about 8% of all circulating Bitcoins.

Data shows that miners have been selling tokens since the end of 2023 when Bitcoin prices began to rise, well before the "halving" in April