JPMorgan warns about the danger of dropping BTC cost of production

According to the holding analysts, some market participants perceive the indicator “as the lower bound” of the first cryptocurrency’s price

14.07.2022 - 09:45

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What’s new? According to financial holding company JPMorgan, bitcoin’s average cost of mining dropped from $24 000 to $13 000 in July, which could have a negative impact on the first cryptocurrency’s rate. Analysts explained that “the production cost is perceived by some market participants as the lower bound of the Bitcoin’s price range in a bear market.”

Bloomberg’s material

What else did JPM say? The drop in the production cost is mainly due to a decline in electricity consumption. The Cambridge Bitcoin Electricity Consumption Index (CBECI) was down by 14,8% in June compared to May.

JPMorgan explained that this situation reduces the pressure on mining companies to sell mined assets to increase liquidity and for deleveraging, ultimately increasing their profitability. However, at the same time, the decline in production costs may have a negative impact on the bitcoin price going forward.

Source: Assets.bwbx.io

As of July 14, 09:30 UTC, BTC is trading at $19 739, down by 0,45% per day, according to the Binance exchange.

Earlier, Binance analysts noted that the profitability of mining companies fell significantly in the prevailing market downturn, as it is directly proportional to the rates of the mined cryptocurrencies.

At the end of June, JPMorgan pointed to signs of an imminent recovery in the digital asset market. Thus, major players began to provide financial support to struggling companies, the industry is deleveraging, while venture capital investments, on the other hand, show a steady inflow.

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