JPMorgan Predicts Bitcoin to Fall to $42,000 Following Halving
JPMorgan has indicated that the price of Bitcoin could drop to around $42,000 after the upcoming halving event in April.
JPMorgan Predicts Bitcoin to Fall to $42,000 after Halving. Photo: HWZ
According to analysis from several JPMorgan experts, the upcoming halving event scheduled for April could significantly trigger a sharp decline in Bitcoin's price.
As Coin68 has previously reported, halving is Bitcoin's inflation control mechanism, designed by Satoshi Nakamoto to halve the reward for mining blocks every 120,000 blocks, approximately every four years. This event aims to prolong the production time of Bitcoin, ensuring that the maximum supply of the world's largest cryptocurrency remains at 21 million BTC by 2140.
Since its inception in 2009, Bitcoin has undergone three halving events in 2012, 2016, and 2020. The fourth halving event is estimated to occur around the afternoon of April 22, 2024 (Vietnam time), assuming the Bitcoin network maintains an average block generation time of 10 minutes without any disruptions.
Read More: What is Bitcoin Halving? Things to Know About Bitcoin Halving
According to recent research led by Nikolaos Panigirtzoglou and other analysts at JPMorgan, the halving will reduce the mining reward from 6.25 BTC per block to 3.125 BTC. This event is expected to negatively impact miner profitability, increase Bitcoin production costs, and subsequently affect its price, leading JPMorgan experts to predict Bitcoin could plummet to around $42,000 post-halving.
Analysts note that based on historical data, production costs play a crucial role as a price floor for Bitcoin. They estimate the current midpoint of production costs to be $26,500, which could double to $53,000 post-halving.
However, experts also anticipate a potential 20% decline in Bitcoin's network hashrate, primarily due to miners exiting the market as profitability diminishes. From this perspective, Bitcoin production costs could decrease to $42,000, based on an average electricity cost of $0.05 per kWh.
"This $42,000 price level is also the point where we expect Bitcoin to stabilize following the halving excitement."
In contrast to JPMorgan's view, Standard Chartered Bank forecasts Bitcoin could reach $200,000 by the end of 2025.
Nevertheless, halving events have long been expected to initiate new growth cycles in the crypto market, with Bitcoin often reaching new highs within a year of each halving event.
Bitcoin price fluctuations after each halving event. Source: Crypto.com
Buoyed by the strong support of Bitcoin ETFs launched earlier this year, Bitcoin's price has surged recently, even reaching an all-time high since November 2021, with the king coin trading hands at $60,926.
