The bitcoin (BTC) price is likely to weaken after the reward halving, a quadrennial event that slows the rate of growth in bitcoin supply and looks set to occur around April 19-20, Wall Street giant JPMorgan (JPM) said in a research report on Wednesday. The bank sees a downside for the world’s largest cryptocurrency after the halving because the market is still in overbought conditions, according to its analysis of open interest in bitcoin futures.
Furthermore, the cryptocurrency price of about $61,200 is still above the bank’s volatility-adjusted comparison with gold, which sets it at $45,000, and its projected production cost of $42,000 after the halving. The bitcoin production cost has historically acted as a lower boundary for BTC prices. JPMorgan also notes that venture capital funding remains subdued despite the recent crypto market resurgence.
Understanding the Bitcoin Halving Event
With the digital asset market anticipating the arrival of the critical event, JPMorgan Bank has predicted the industry to face further losses after Bitcoin halving. Indeed, the investment bank has stated that even this is “already priced in” to the market with it set to arrive this week.
According to Watcher Guru, one of the most important events for the digital asset market is the Bitcoin halving. Arriving every four years, it sees the circulating supply of BTC get cut in half. This, in turn, increases the value of the asset over time, creating a functionality that is exclusive to the digital currency.
Yet, in 2024, there seems to be some concern regarding the actual impact of Bitcoin on the market. Indeed, JPMorgan has predicted further losses to meet the market with the arrival of the Bitcoin Halving. Specifically, The Block reported the bank’s analyst, Nikolaos Panigirtzoglou stating that expected price increases are “already priced in.”
Moreover, the analyst said, “In fact, we see a downside for the bitcoin price post-halving for several reasons.” Among those is the inclusion of “overbought conditions” facing the asset within the market. Specifically, this is observed in the bank’s analysis of Bitcoin futures.
The asset has declined more than 1.2% over the month, after ascending to an all-time high of $73,000 in March. Subsequently, the Bitcoin Halving Event is scheduled to take place this Friday, April 19th. Moreover, the industry as a whole is hopeful that its presence could reverse a present downtrend throughout April thus far.
Conclusion
As the Bitcoin halving approaches, JPMorgan’s analysis suggests potential downside risks for the cryptocurrency due to overbought market conditions and its current valuation exceeding projected production costs and gold's comparison. Despite anticipation in the digital asset market, concerns linger regarding the actual impact of the halving event. JPMorgan predicts further losses, indicating that expected price increases may already be factored into the market. With Bitcoin’s decline following its March peak and the halving event on the horizon, the industry braces for potential market shifts, hoping for a reversal of the recent downtrend in April.
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