(Kitco News) – Asset prices from Bitcoin (BTC) to stocks and gold trended higher in early trading on Thursday after positive news on the economic front provided a boost to investor sentiment.
The latest jobs data from the U.S. Labor Department showed initial claims for state unemployment benefits fell to a seasonally adjusted 233,000 for the week ending June 22, better than the expected 236,000.
On the GDP front, the Bureau of Economic Analysis said the third and final reading of Q1 GDP showed that the economy grew 1.4% in the first three months of the new year, up from the second estimate of 1.3%.
While Friday’s Personal Consumption Expenditure (PCE) report still looms large in the minds of investors, the positive readings on jobs and GDP have helped assuage concerns about the potential for an interest rate hike and boosted hopes that an interest rate cut could come in September.
The CME FedWatch Tool now puts the odds of a rate cut in September at 68%, up from 62% yesterday.
Data provided by TradingView shows that after trading near support at $61,000 in the early hours on Thursday, Bitcoin’s price spiked to $62,357 after the GDP and jobs reports were released.
BTC/USD Chart by TradingView
At the time of writing, BTC trades at $61,650, an increase of 0.43% on the 24-hour chart.
While many crypto analysts have brushed aside concerns about a large-scale token dump resulting from the distribution of the Mt. Gox Bitcoin to creditors, analysis at JPMorgan still sees the potential for downside risk in July due to potential selling pressure from the creditors.
In a note to investors on Wednesday, the analysts, led by Nikolaos Panigirtzoglou, highlighted that the creditors are set to receive 142,000 Bitcoins worth about $9 billion at current prices, and said the threat of a potential sell-off can’t be discounted based on the recent behavior of Gemini creditors.
“This fear is justified given the recent behavior of Gemini creditors which are assumed to have liquidated part of the crypto assets received in recent weeks,” the analyst said. On May 29, Gemini announced that Gemini Earn users had received all their digital assets back in-kind, following its settlement with Genesis.
Based on the negative price action in crypto markets since May 29th, the analysts said it’s “fair to assume that some of Gemini creditors, which are mostly retail customers, have taken at least partial profit in recent weeks.”
While the deadline for repayment to Mt. Gox creditors is set for October, JPMorgan predicts that most of the reimbursements will occur in July, and if that’s the case, crypto markets are expected to sell off next month and then rebound in August, the report said
They noted that one positive development for crypto prices will be the release of cash payments to creditors of the bankrupt FTX cryptocurrency exchange, as they are expected to reinvest those funds back into the market. But that is not expected to occur until sometime after October 7 and will not help provide a buffer against a Mt. Gox sell-off that could transpire in July.
“The problem for crypto markets is that there is likely a gap of around three months between potential Mt. Gox creditor liquidations in July and FTX creditor reinvestments in October/November,” the report concluded.
Offering a positive outlook for July was market analyst Sage Young, who noted that history shows that a “falling Bitcoin price in Junes means double-digit gains in July.”
“Each time the price of Bitcoin has seen its price decline in June, the largest cryptocurrency by market cap would recover in the following month—typically by double digits,” Sage wrote. “According to data from crypto derivative statistics platform Coinglass, leaving this year aside, BTC has had five Junes in which its price had a negative performance: 2022, 2021, 2020, 2018, and 2013. After the June drawdowns, BTC rallied more than 9.6% in each of those five years, sometimes as high as 24%.”
“Zooming out, the median return for BTC for all Junes is -0.49%, while BTC’s median July return is 9.6%,” he added.
With Bitcoin trading at $61,650 currently, that represents a decrease of around 9% from its price of $67,723 on June 1. Historical precedent suggests that King Crypto will see a bounce back in July and will continue to trend higher through the end of 2024.
