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