According to the bank’s analysts, this event has already been factored into the price of the asset

JPMorgan allows the possibility of the BTC rate to fall after halving

19.04.2024 - 12:25

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4 min

What’s new? Analysts at JPMorgan Bank do not expect a bitcoin rally after the April 20 halving, which will reduce the reward for mining blocks and, as a consequence, slow down the issuance of the asset. According to experts, this event is already factored into the price, and it is more likely to be followed by a decline in the rate, which can occur for several reasons at once.

Material by The Block

Halving is code’s embedded cut in half of the reward to miners for a mined block on the blockchain, which occurs approximately every four years. Initially, miners received 50 BTC; on November 28, 2012, the number dropped to 25 BTC, on July 9, 2016, to 12,5 BTC, and on May 11, 2020, to 6,25 BTC. In April 2024, the award will be cut to 3,125 BTC

What else is known? According to analysts, bitcoin is in an overbought zone, as indicated by the open interest (OI) in bitcoin futures. In addition, the asset’s exchange rate is significantly higher than the projected cost of mining one coin after halving ($42 000).

Experts also pointed to the volume of venture capital funding for crypto projects this year, which remains small despite the market’s recovery. According to them, this could also lead to a drop in the BTC exchange rate after the reduction of the block reward.

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JPMorgan also notes that halving will force miners with less efficient equipment to shut down, as the reduction in rewards will not allow them to cover costs. In this regard, they expect a decrease in the hashrate of the network and consolidation of the industry in the hands of the largest publicly traded companies.

Earlier, a similar assumption was made by analysts at broker Bernstein. But, unlike JPMorgan experts, they expect the BTC rate to grow to $150 000 by 2025.

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JPMorgan also admitted that some mining companies may move some data centers with outdated equipment to regions with cheap electricity, such as Latin America and Africa, to mine other cryptocurrencies based on the bitcoin blockchain. However, according to experts, such initiatives will prove unprofitable due to the lower market capitalization and liquidity of such coins.

Earlier, the media reported that miners from Africa and South America began buying old equipment in the United States in anticipation of halving.

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Fred Thiel, the head of the largest miner Marathon, also believes that halving is already factored into the price and will not lead to growth of the asset. In turn, analyst Willy Woo allowed the possibility of the onset of a bear market when BTC falls below $58 900.

At the time of writing, BTC is trading at $64 959 on Binance, having added 4% over the day. The weekly drop amounted to 8,3%.

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