As Bitcoin inches closer to its highly anticipated halving event, analysts at JPMorgan (NYSE:JPM) are throwing cold water on expectations of a subsequent price surge.
What Happened: Their report, released on Wednesday, argues that the halving has already been priced into the market, potentially leading to a post-halving price decline, The Block reported.
“We don’t expect a price increase because the halving is likely factored into the current price point,” stated Nikolaos Panigirtzoglou, lead analyst at JPMorgan, echoing previous pronouncements.
They identify several factors supporting their bearish outlook.
Overbought Market And High Valuation
JPMorgan’s analysis of open interest in Bitcoin futures suggests the market is currently “overbought,” indicating potential overvaluation.
Furthermore, Bitcoin’s price sits significantly above JPMorgan’s volatility-adjusted target of $45,000 when compared to gold.
This, coupled with the fact that the current price exceeds their projected post-halving production cost of $42,000, fuels their concerns about a price correction.
Venture Capital Funding And Miner Woes
The report also highlights the lack of robust venture capital funding in the crypto space this year, despite a recent market resurgence.
This tepid investor sentiment could further dampen Bitcoin‘s (CRYPTO: BTC) post-halving price performance.
The Halving’s Impact On Miners
The halving, which will cut Bitcoin miner rewards in half, is expected to have a significant impact on the mining industry.
“We anticipate a drop in hashrate (computing power) as unprofitable miners exit the network,” says the report.
This could lead to consolidation among mining companies, with publicly-listed miners potentially gaining a larger share of the remaining rewards.
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Limited Options For Struggling Miners
The report explores potential post-halving scenarios for struggling miners.
While some might consider relocating to regions with lower energy costs, like Latin America or Africa, others might look to repurpose their mining rigs for other purposes.
However, migrating to mine alternative Bitcoin hard fork cryptocurrencies is deemed “highly unlikely” due to the rigs’ specialization and the lower market cap and liquidity of those currencies.
JPMorgan’s report paints a cautious picture for Bitcoin’s post-halving future.
However, the cryptocurrency market is known for its volatility, and actual events may unfold differently.
What’s Next: With the halving on the horizon, investors seeking deeper insights into the potential implications for Bitcoin and the broader cryptocurrency market should consider attending Benzinga’s upcoming Future of Digital Assets conference on Nov. 19.
This event will feature leading industry experts who will discuss the latest trends, investment strategies, and regulatory developments within the digital asset landscape, providing valuable information for both experienced and new investors in this dynamic market.
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