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JP Morgan analysts are suggesting that BTC prices will continue to fall ahead of Bitcoin halving in April.
Analysts from a leading US financial institution, JP Morgan, have shared their views that the cryptocurrency Bitcoin has a probability of further price decline. This assessment started after Bitcoin marked its new highs at the beginning of this month but now has entered a downtrend.
Price Movement in Bitcoin During the Last Week
In the last week, the price of Bitcoin has decreased by approximately 5%, as per the data from investing.com. The analysts from JP Morgan believe that Bitcoin remains overbought, even after the significant drop down in the last few days.
They have considered the premium of futures prices to spot prices and current positioning in the futures markets to determine the overbought condition of the market.
Analysts have also observed a decline in the Bitcoin spot ETFs in addition to the overbought conditions. Net outflows in the BTC ETF have continued since March 18, with the maximum single-day net outflow of $320 million observed on March 19.
Factors Supporting Views of Analysts from JP Morgan
The combination of overbought conditions and a decrease in investor interest is confirmed by the recorded outflows in BTC ETFs, which supports the views of analysts at JP Morgan. Thus, they conclude that there is a probability that Bitcoin prices can decrease further.
With the continuous evolution in the cryptocurrency market, investors will closely observe these developments to assess the future trend of Bitcoin and other digital assets.
The price of Bitcoin continues to experience downward pressure. The analysts at JP Morgan have shared that crypto investors will continue to book profits in the next week. This prediction is also supported by the upcoming Bitcoin halving event scheduled for April 2024.
Bitcoin halving events are historically associated with increases in price volatility and speculation. The analysts suggest that investors who are benefiting from the recent price surge are inclined to book their profits ahead of halving, which will further decrease the price of Bitcoin.
BTC Price Prediction by JP Morgan
JP Morgan analysts jointly predict that BTC prices could drop to $42,000 after halving. This prediction is based on the company’s analysis of the production costs of Bitcoin, also known as mining costs.
Analysts have observed that the production cost of Bitcoin has served as the lowest bound for its price. Stated differently, the price of BTC is inclined to stay above the cost incurred by miners in the production of new coins. This relationship implies that the miners will not like to share their holding below the production cost, as no one will be interested in booking the financial losses.
With this background, analysts estimate that post-halving with the reduction in mining rewards will effectively lower the cost of producing Bitcoin to as low as $42,000. This analysis recommends that the BTC price could decline to this price level and represent the new lower bound based on mining costs.
The current data from MacroMicro indicates that the current Bitcoin production cost is around $50,000. It implies that the upcoming halving will significantly decrease production costs, which, in turn, will decrease BTC prices.
Steve Anderson is an Australian crypto enthusiast. He is a specialist in management and trading for over 5 years. Steve has worked as a crypto trader, he loves learning about decentralisation, understanding the true potential of the blockchain.
