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As the Bitcoin (BTC) halving event approaches around April 19-20, financial giant JPMorgan (JPM) predicts a downturn in the cryptocurrency’s value, according to a recent research report.
JPMorgan’s analysis suggests that Bitcoin’s market conditions are overbought, indicating potential downside risks after the halving. The bank points to open interest in Bitcoin futures as a key indicator of this trend.
Despite Bitcoin trading at approximately $61,200, JPMorgan contrasts this with its volatility-adjusted comparison with gold, placing it at $45,000. Additionally, the projected production cost of Bitcoin post-halving is estimated at $42,000, historically acting as a price floor for the cryptocurrency.
JPMorgan highlights subdued venture-capital funding in the cryptocurrency market, despite recent market recoveries. However, it predicts that mining companies will face the most significant impact from the halving.
The halving is expected to result in the departure of unprofitable Bitcoin miners from the network. This exodus could lead to a substantial decline in hashrate and increased consolidation among mining firms, particularly favoring publicly-listed entities.
Following the halving, JPMorgan anticipates that some Bitcoin mining companies may seek to diversify their operations into regions with low energy costs, such as Latin America or Africa. This strategic move aims to repurpose inefficient mining rigs to extract salvage value from otherwise idle assets.
JPMorgan’s insights into the potential effects of the Bitcoin halving highlight both short-term challenges and long-term strategic shifts within the cryptocurrency mining sector.