- JPMorgan predicts Bitcoin’s price decline post-halving due to overbought market conditions.
- Bitcoin’s current price exceeds its production cost and gold comparison, signaling a potential downward correction.
- Halving may challenge miners’ profitability, leading to consolidation and shifts to regions with cheaper energy.
JPMorgan Chase, a Wall Street giant, is throwing cold water on expectations of a sustained price surge for Bitcoin (BTC) following the upcoming halving event. In a research report published on Wednesday, the bank’s analysts argued that the cryptocurrency is currently overbought and poised for a decline after the halving, anticipated around April 19-20.
JPMorgan based its prediction on several factors. Firstly, their analysis of open interest in Bitcoin futures suggests the market is still in “overbought conditions.” This indicates that many investors may already be positioned for a price increase, potentially limiting further upward momentum.
Secondly, the bank argued that Bitcoin’s current price of around $61,200 sits above both their volatility-adjusted comparison with gold (which sets it at $45,000) and their projected production cost of $42,000 after the halving. Historically, production cost has acted as a lower boundary for Bitcoin prices, suggesting a potential downward correction.
The report also highlighted the impact of halving on Bitcoin miners. As the halving reduces the block reward earned for mining new Bitcoins, some miners, particularly those with less efficient operations, will likely struggle to remain profitable. This could lead to a significant drop in the hashrate, the computing power securing the Bitcoin network.
JPMorgan anticipates consolidation among miners, with publicly listed companies potentially gaining a larger share. Additionally, the report suggested struggling miners might seek regions with lower energy costs, like Latin America or Africa, to maintain some profitability.
JPMorgan’s report isn’t the only voice expressing skepticism about a post-halving surge. A previous report from the bank in February noted that Bitcoin’s strong performance in 2024 might have already priced in some of the anticipated gains from the halving. This aligns with the recent weakness observed in Bitcoin mining stocks, which some analysts see as an attractive entry point for investors anticipating a future rebound.
