JPMorgan doubles down on $42,000 Bitcoin price forecast post-halving
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Bitcoin’s price action post-halving has generated numerous headlines in recent weeks. While historical patterns suggest a bullish trajectory, not all analysts agree. Analysts at JPMorgan reiterated a bearish outlook in a recent report, predicting a potential drop to $42,000 for Bitcoin after the halving.
JPMorgan’s prediction is based on several factors, including Bitcoin’s overbought conditions, its current valuation surpassing JPMorgan’s gold-based benchmark and an anticipated rise in production costs due to halving.
The next halving event will slash the block reward from 6.25 BTC to 3.125 BTC, which analysts believe will adversely affect miner profitability and inflate the cost of producing new Bitcoin (Bitcoin’s production cost).
In a separate report in February, JPMorgan analysts estimated that the production cost will increase from $26,500 to around $53,000 after the halving. According to them, a consequential rise in production costs will ultimately affect Bitcoin’s price.
According to analysts, there is a chance that the hashrate of the Bitcoin network may decrease by approximately 20% after halving. This is primarily because less efficient mining rigs may cease operations due to reduced profitability. As a result, the estimated production cost range would decrease even further to $42,000, based on an estimated average electricity cost of $0.05/kWh.
“As unprofitable bitcoin miners exit the bitcoin network, we anticipate a significant drop in the hashrate and consolidation among bitcoin miners with a highest share for publicly-listed bitcoin miners,” wrote analysts in the latest report.
Apart from the halving itself, JPMorgan analysts cited the lack of venture capital entering the crypto industry as a contributing factor to Bitcoin’s depreciation. Analysts noted that despite market recovery signs, investment levels do not match optimism in other segments.
JPMorgan is not the only company being cautious. Goldman Sachs’ recent report suggests that current economic conditions might not create favorable conditions for Bitcoin’s price surge post-halving.
Interest is on the rise despite divided projections
Each time 210,000 blocks have been solved, the halving happens. Theoretically and historically, Bitcoin’s price climbs higher following the event due to supply-demand dynamics.
Unlike JPMorgan, other major firms are more optimistic about Bitcoin’s price increase after the halving. Analysts at Bernstein said in a note to clients on Wednesday that they anticipate Bitcoin’s resumed bullish trajectory after the halving, reiterating their target of $150,000 by the end of 2025.
Bernstein previously predicted that Bitcoin’s price could reach $90,000 by year-end.
Public interest in Bitcoin halving has also surged, with Google Trends searches for “Bitcoin halving” reaching an all-time high earlier this week.
Surpassing a key target earlier today, Bitcoin is now trading near $65,000, up 4% in the last 24 hours, according to CoinGecko.
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Author: Vivian Nguyen
