Bitcoin miners might continue to cause selling and price pressure on the coin as sell-offs continue at a discount, JPMorgan Chase & Co. said.

Bitcoin Miners Sell Their Holdings at a Discount

Miners who participate in public trading, according to JPMorgan's strategists led by Nikolaos Panigirtzoglou, accounted for only over 20% of the total exchange volume, driven by the mass-selling activities we witnessed in May and June. The strategists added that these were results of efforts to improve exchange liquidity, fund costs, and reduce margins or exposure to leveraged positions.

On the other hand, individual and institutional miners have also begun selling a large portion of their block rewards to cover increasing expenses due to rising electricity costs. More than that, they also noted that miners may have been reducing their leverage already because they have less access to capital markets today.

While the sell-off from miners is often at a discount because of Bitcoin's downward price movement in the recent weeks, it may provide retail and institutional traders with a significant upside in the future.

Other reasons pointed for the sell-off of Bitcoin miners are surging electricity costs worldwide caused by the conflict between Russia and Ukraine, affecting prices for natural gas and coal. Reports say that the rigs used by most miners are 'carbon-generating supercomputers', which also consume a considerable amount of energy.

Sell-off Not Completely Bad News, JPMorgan Says it Presents Significant Upside

However, it is not all bad news for the crypto space. According to financial experts, the possible short-term price collapse of Bitcoin may still present better prospects for its price in the future.

According to a separate JPMorgan Chase research report, Bitcoin has already fallen significantly far from its fair value. As of the time of JPMorgan's report, the coin was still undervalued by 28%. It is still expected to attain its price objective of $38,000 in the future. But as of now, inflation worries might continue to fuel the current price ceiling. This is not only an impact felt by the crypto market, but global markets are taking a beating as well.

This report from JPMorgan is considered remarkable by many. This is primarily because Jamie Dimon, chief executive officer of JPMorgan, has always maintained skepticism around the coin. Dimon even went as far as saying that Bitcoin is worthless because it holds no intrinsic value.

JPMorgan began providing wealth management customers with access to six crypto funds last summer, allowing them to add bitcoin exposure to their portfolios. Despite Dimon's previous statements that bitcoin has no fundamental value, "regulators would regulate the hell out of it.

Securities and Exchange Commission (SEC) Hester Pierce told CNBC on Wednesday that the United States has lost the chance to regulate the cryptocurrency space. Pierce also asked Congress to identify the SEC's position on regulating the crypto market so that her office can take more proactive actions against fraud. Moreover, Pierce stressed that they want to avoid the long-term ramifications of discouraging healthy innovation and experimentation.

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