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Is Bitcoin due for a major correction? JPMorgan predicts drop to $42,000 after April halving – Fortune

A new report from JPMorgan warns of an impending price correction for the world’s top cryptocurrency. CFOTO/Future Publishing/Getty Images

Bitcoin price—On Thursday, it topped $63,000.Although it has reached heights not seen in two years, the upcoming coin halving event could push the price down to $42,000, according to analysts at JPMorgan.

“Bitcoin production costs have empirically served as a floor for Bitcoin prices,” analysts said in a report released Wednesday, adding that post-halving production costs would double to around $53,000. I predict that it is possible. This could potentially reduce the Bitcoin network’s hashrate by 20%, meaning fewer miners would be competing to generate Bitcoin at the same time.

“This $42,000 estimate is also the level we expect Bitcoin price to be headed once the Bitcoin halving-induced euphoria subsides after April,” the analysts wrote. There is.

The halving, expected around April 19th, will slow down the rate at which new coins are minted, reducing the reward miners earn per block from 6.25 Bitcoins to 3.125 Bitcoins. While reduced supply has historically caused prices to soar, increased production costs could also impact Bitcoin prices, as fewer miners will be able to maintain profits.


JP Morgan analysts concluded that “there is also horizontal integration through mergers and acquisitions among Bitcoin miners in each region, and there is a possibility to take advantage of business synergies,” and the share of listed miners in the hash rate will increase. He pointed out that the number is likely to increase.

Bitcoin is nearing an all-time high of about $69,000, and cryptocurrency providers like Coinbase, which has suffered outages due to a surge in app and site traffic, are exhausted. However, JPMorgan’s bearish forecast could undermine optimism that this upward trajectory will continue for the long term.

“We expect consolidation,” said Fred Thiel, CEO of Marathon Digital Holdings, the world’s largest publicly traded mine. luck. He added that around 10% to 25% of miners, likely smaller players, will go offline at some point. But Thiel expects some of it will come back once costs are optimized.

How an increase in production costs will harm miners is closely related to the price of Bitcoin. Even if it goes up, they will still be making the same amount of money “a few months after the halving,” said Alessandro Cecere, head of marketing at mining pool Luxor.

In fact, after the last three halvings in 2008, 2012, and 2016, hashrate briefly declined and then recovered.

But like JPMorgan, Galaxy Digital CEO Mike Novogratz also sees signs of weakness, at least in the short to medium term, telling Bloomberg TV on Thursday: “We “I would say it’s reaching a very bubbly, frothy level.”

“I wouldn’t be surprised if there were some fixes or consolidations,” he added during the interview. “A correction could see a correction to the mid-$50,000s before rallying toward new highs.”

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