JPMorgan claims that Bitcoin still looks overvalued due to a lack of venture capital funding for cryptocurrencies and other metrics.
Two of the largest U.S. banks are urging cryptocurrency investors to be cautious about the upcoming bitcoin halving event, which analysts believe may not play out like previous cycles.
In a report on Wednesday, JPMorgan Chase predicted that Bitcoin’s price will not rise after the halving event and is more likely to resume the downward trend that began earlier this month.
Could the halving be bearish for Bitcoin?
The bank’s view is consistent with its relatively bearish forecast for the full year and has not been swayed by the growing optimism surrounding the passage of a Bitcoin spot ETF or the halving.
wrote a team led by analyst Nikolaos Panigirtzoglou.
“We do not expect the Bitcoin price to rise after the halving as it is already priced in. In fact, we see a risk of a decline in the Bitcoin price after the halving for several reasons.”
The analyst used the price of gold as a reference point because the two assets have similar investment thesis, namely safe-haven and inflation hedge. Taking volatility into account, the bank believes that the price of Bitcoin should be $45,000, which means that its current market price ($63,700) is seriously overvalued.
Supporting their view is the continued preference for long positions in Bitcoin futures open interest and the lack of venture capital funding in the crypto industry this year.
Alex Kuptsikevich, senior market analyst at FxPro, added in an email to Forbes: “The technical picture for Bitcoin is quite worrying as we did not see a rebound after the price drops on Friday and Saturday. Instead, the market seems to be adjusting to the current price in anticipation of the halving.”
Goldman Sachs' Outlook on Bitcoin
In a note to clients last week, Goldman Sachs acknowledged that bitcoin’s past three halving cycles have all been followed by huge price rallies, though the exact time it takes to reach new highs varies widely.
This cycle looks even more different: Bitcoin broke through the previous cycle’s all-time high of over $69,000 in March, yet the halving was still a month away.
“Given current macro conditions, extrapolating past cycles and the impact of the halving should be done with caution,” the analysts said.
The halving itself will take place later this week, expected at 01:44 UTC on April 20. Whether or not it results in a “buy the rumor, sell the news” event in the short term, Goldman Sachs believes that BTC’s immediate price action is almost irrelevant.
“Bitcoin’s price performance is likely to continue to be driven by the mentioned supply and demand dynamics and continued demand for a Bitcoin ETF, which combined with the self-reflective nature of crypto markets are the main determinants of spot price movements,” the bank said.
