After the April halving event, JPMorgan has warned investors that the price of bitcoin could drop as low as $42,000. The experts at the global investment bank clarified that $42K is the price point at which they “envisage bitcoin prices drifting towards once the euphoria caused by the bitcoin halving subsides after April.” Additionally, the bank recently said that the next significant Ethereum update and the halving of bitcoin are “largely priced in.”
JPMorgan Expects Bitcoin to Fall to $42,000
In a report released on Thursday, global investment firm JPMorgan forewarned investors that following the April halving event, the price of bitcoin would decline.
According to the bank’s researchers, the average cost of producing one bitcoin is roughly $26,500. They said that following the halving event, this amount will “mechanically double” to $53,000. But they also take into account the possible effects of harder mining, which can drive away smaller miners from the market. According to preliminary calculations, this scenario might result in a 20% reduction in mining difficulty, which would ultimately slash production costs.
The experts stated, “This 20% drop would bring the hashrate closer to its historical trend.”
This would essentially reduce our predicted manufacturing cost range’s midpoint to $42k. When the euphoria surrounding the April bitcoin halving fades, we also see bitcoin prices heading towards this $42k estimate.
The projections of the JPMorgan analysts were predicated on two fundamental tenets. The first is that, depending on location and size, miners’ post-halving electricity costs will typically be 5 cents per kilowatt hour. Second, some private miners with less effective equipment and restricted access to cash will be forced out of the market when their production costs exceed profitability as bitcoin mining gets more energy-intensive after April. The hashrate is predicted to drop by 20% as a result of this exodus.
The next significant Ethereum network upgrade and the Bitcoin halving event, according to the investment bank last month, are “largely priced in.” Seventy-eight percent of institutional traders surveyed by JPMorgan recently stated they have no plans to trade cryptocurrencies.
Do you believe JPMorgan is correct that the April halving event caused the price of bitcoin to drop to $42K? Tell us in the space provided for comments below.