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JPMorgan says bitcoin price could fall to $42,000 after April halving
The next Bitcoin halving scheduled for April could trigger a sharp drop in the price of Bitcoin, according to JPMorgan analysts.
The halving event will reduce Bitcoin miner rewards from the current 6.25 BTC per block to 3.125 BTC and this reduction will negatively impact miner profitability and lead to an increase in the cost of producing Bitcoin, they wrote JPMorgan analysts led by Nikolaos Panigirtzoglou. in a report Wednesday. The cost of producing bitcoin influences its price, and analysts predict it will reach around $42,000 after the halving.
โThe cost of producing bitcoin has empirically acted as a lower bound for bitcoin prices,โ the analysts say. โThe midpoint of our estimated production cost range currently sits at $26,500, which would mechanically double after the halving to $53,000.โ
However, analysts noted that there is a possibility of a 20% drop in the Bitcoin network hashrate after the halving, mainly due to less efficient equipment abandoning mining operations due to lower profitability. This would therefore reduce the midpoint of the estimated generation cost range to $42,000, based on an average electricity cost of $0.05/kWh, they added.
โThis $42,000 estimate is also the level we expect bitcoin prices to move toward once the bitcoin-induced euphoria subsides after April,โ the analysts noted.
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