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JP Morgan expects Bitcoin to fall to $42,000 after halving

JPMorgan warned investors of a possible decline Bitcoin BTC Price At $42,000 after the halving process which will take place in April. The bank's analysts explained that $42,000 is the level to which they "expect Bitcoin prices to drift once the euphoria caused by the post-April Bitcoin halving subsides."

The bank also recently said that the upcoming major Ethereum network halving and upgrade event had been “primarily priced.”

Bitcoin mining cost could push price to $42,000

JPMorgan warned note Investors on Thursday warned of a possible fall in the price of Bitcoin after the April halving.

The bank's analysts estimate the average cost of Bitcoin mining to be around $26,500 per Bitcoin. That cost will “mechanically” double to $53,000 after the halving, they said.

However, they also take into account the potential impact of increased mining difficulty. This could force smaller miners out of the market.

Read also: Will Bitcoin Reach All-Time High of $69,000 Before the Halving?!

This scenario could lead to a 20% reduction in mining difficulties compared to initial estimates, thereby reducing production costs.

“This 20% drop will bring the hash rate closer to its historical trend,” the analysts wrote.

And also: "This will effectively reduce the midpoint of our estimated production cost range to $42,000. This $42,000 estimate is also the level we envision Bitcoin prices heading towards once enthusiasm halving will have calmed down after April." Looking at the daily Bitcoin price chart, this represents the Fibonacci retracement level of the bullish wave if it hits the all-time high of $69,000.

Daily Bitcoin Price Chart
Daily BTC Price Chart

Basic assumptions

JP Morgan analysts based their forecasts on two main assumptions:

  • The first is that average electricity costs after the halving for miners will be 5 cents per kilowatt hour. This is a number that can vary depending on location and size.

  • Second, as the energy intensity of Bitcoin mining increases after April. Some individual miners with less efficient equipment and limited access to capital will be forced out of the market as their cost of production exceeds profitability. This release is expected to result in a 20% drop in hash rate.

Read also: Beyond $60,000 for Bitcoin: New Factors for Continued Bullish Enthusiasm

Last month, the investment bank said the Bitcoin halving and the next major upgrade to the Ethereum network were “primarily priced.”

A recent JP Morgan survey of more than 4,000 institutional traders found that 78% of respondents have no plans to trade cryptocurrencies.

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