JPMorgan analysts anticipate a decline in Bitcoin’s price following the halving event, attributing it to the already factored-in nature of the event in the current pricing. They assert that the post-halving scenario might witness a downside for Bitcoin for various reasons.
Their analysis highlights Bitcoin’s sustained position in “overbought conditions” as evidenced by open interest in Bitcoin futures. Additionally, Bitcoin’s price continues to exceed JPMorgan’s volatility-adjusted estimate of $45,000 relative to gold and remains above the anticipated production cost of $42,000 post-halving.
The tepid level of venture capital funding in the crypto space this year, despite the resurgence of interest, is cited as another factor that could exert downward pressure on Bitcoin’s price after the halving.
The current price of Bitcoin stands around $61,500, as per data from The Block.
Regarding the halving event itself, where the issuance rewards for Bitcoin miners will decrease from 6.25 BTC per block to 3.125, the analysts anticipate a consequential impact on Bitcoin miners and the overall mining hashrate or computational power.
Anticipating a reduction in the hashrate as unprofitable miners exit the network, the analysts foresee consolidation among Bitcoin miners, with publicly-listed miners likely gaining a larger share.
Post-halving, some Bitcoin mining firms might explore diversification into regions with lower energy costs, such as Latin America or Africa, and repurpose their inefficient mining rigs for salvage value.
While there’s a possibility of mining alternative cryptocurrencies resulting from Bitcoin hard forks, the analysts consider this scenario unlikely due to the specialized design of mining rigs for Bitcoin. Even if pursued, such endeavors are projected to remain unprofitable due to the lower market cap and liquidity of these alternative cryptocurrencies compared to Bitcoin.
