Bitcoin Halving: JPMorgan Analysts Expect BTC to Drop
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In a recent report, JPMorgan analysts shed light on the anticipated impact of the upcoming Bitcoin halving event. As the crypto community eagerly awaits this significant milestone, the question on everyone’s mind is: How will it affect the world’s most popular cryptocurrency?
Bitcoin halving, which occurs approximately every four years, is a crucial event in the cryptocurrency ecosystem. During this event, the issuance rewards for Bitcoin miners are cut in half.
Miners currently receive 6.25 BTC per block; after the halving, this reward will decrease to 3.125 BTC per block.
As reported by Bloomberg, JPMorgan’s analysts assert that the current bitcoin price already has the upcoming halving priced in. In their report, they state, “We do not expect bitcoin price increases post-halving as it has already been priced in.” This perspective challenges the notion that halvings inevitably lead to price surges.
🚨JUST IN: JPMORGAN EXPECTS #Bitcoin PRICE TO KEEP DIPPING AFTER THE HALVING!
— Kyle Chassé (@kyle_chasse) April 18, 2024
JPMorgan’s Reasons for Cautious Expectations Around the Bitcoin Halving
According to JPMorgan analysts, the factors contributing to the cautious outlook on the upcoming Bitcoin halving include:
- Overbought Condition Worries: Despite recent declines, JPM fears that Bitcoin remains in “overbought conditions.” This assessment is based on an analysis of open interest in bitcoin futures.
- Volatility-Adjusted Price: JPMorgan’s volatility-adjusted price for bitcoin stands at $45,000. Comparing this to the current market price of $63,500 reveals that bitcoin is trading at a premium, according to the analysts.
- Production Cost: The analysts highlight that Bitcoin’s price exceeds its projected production cost post-halving. With a projected cost of $42,000, the current price of around $63,500 raises concerns.
- Venture Capital Funding: Despite the broader resurgence in the crypto market, venture capital funding for cryptocurrencies has been tepid this year. This lack of substantial investment could dampen price growth, per the report.
Bitcoin Hashrate and Miner Consolidation
Furthermore, the halving is expected to impact Bitcoin miners significantly. As the issuance rewards decrease, some miners may find their operations unprofitable. Consequently, we can expect a significant drop in hashrate—the computing power dedicated to securing the network.
However, JPMorgan believes that publicly listed mining companies are likely to weather the storm better than smaller players. Likewise, consolidation among miners is expected, with larger firms dominating the landscape.
In response to reduced profitability, mining firms may explore diversification. Regions with lower energy costs, such as Latin America or Africa, could become attractive destinations. Repurposing inefficient mining rigs for salvage value might also be on the agenda for struggling miners.
While some speculate that miners could switch to mining Bitcoin hard fork cryptocurrencies, JPMorgan’s analysts dismiss this as “highly unlikely.” These specialized rigs are optimized for Bitcoin mining, and venturing into smaller-cap altcoins would likely yield little profit.
In summary, the Bitcoin halving is set to bring both challenges and opportunities. As the crypto community watches closely, the market’s response will ultimately determine the fate of digital gold.
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