JPMorgan Predicts a Decline in Bitcoin Value Post-Halving

According to JPMorgan’s recent study on bitcoin futures’ open interest, the digital currency is still in an overbought state.

JPMorgan, a behemoth on Wall Street, anticipates a drop in bitcoin (BTC) value following the upcoming halving event. This event, which occurs every four years, reduces the pace at which new bitcoins are created and is expected to happen around April 19-20, as per a report released on Wednesday. The bank’s forecast for a downturn stems from the current overbought status of the market, as indicated by bitcoin futures’ open interest. Moreover, the current price of bitcoin, hovering around $61,200, surpasses JPMorgan’s volatility-adjusted valuation when compared to gold, which is $45,000, and the anticipated cost of producing bitcoin, which is $42,000 post-halving. Historically, the cost of producing bitcoin has served as a floor for its price.

The report also highlights that, despite a revival in the crypto market, venture capital investments remain restrained. Mining operations will bear the brunt of the halving’s effects. “We foresee a considerable decline in the network’s hashrate and a consolidation among miners, particularly favoring those that are publicly traded, as non-profitable bitcoin miners withdraw from the network,” stated a team of analysts led by Nikolaos Panigirtzoglou. The analysts also suggest that after the halving, some bitcoin mining companies might explore relocating to regions with lower energy costs, such as Latin America or Africa. This move would allow them to utilize their less efficient mining equipment to extract residual value, which would otherwise remain unused.

Sentiment: Neutral