In a recent report, JPMorgan predicted that Bitcoin will fall to $42,000 after the upcoming halving event. Indeed, analyst Nikolaos Panigirtzoglou forecasted the drop following halving “euphoria” that is set to take place in the second half of April.
The report pointed to a reduction in minder rewards and a higher cost of production as the greatest influences on the falling value. Conversely, Bitcoin has surged through this week, surpassing $62,000 yesterday. That notes that the highest level BTC has reached since November 2021.
Also Read: JPMorgan: 78% of Institutional Traders Not Interested in Crypto.
JPMorgan Expects Bitcoin Drop After Halving
Through the first two months of 2024, the digital asset sector has seen Bitcoin surge. The asset has climbed steadily closer to its all-time high of $69,000, encouraging investors. Subsequently, the industry is now anxiously awaiting how the upcoming Bitcoin halving could impact the price of BTC.
Although many are hopeful that the decrease in circulating tokens is good for BTC, one major bank expects the opposite. Specifically, JPMorgan has predicted that Bitcoin will fall to $42,000 after the halving event takes place. The forecast is closely connected to an increase in production cost and decreased miner rewards.
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“The bitcoin production cost has empirically acted as a lower bound for bitcoin prices,” JPMorgan analyst Nikolaos Panigirtzoglou said, according to a report from The Block. “The central point of our estimated production cost range stands at $26,500 currently, which would mechanically double post-halving event to $53,000.”
“This $42,000 estimate is also the level we envisage Bitcoin prices drifting towards once Bitcoin-having-induced euphoria subsides after April,” the analyst added. Ultimately, the analyst predicted only certain miners would survive. Essentially, he noted high production costs could eliminate many miners.
Currently, the asset is trading at over $62,000, data from CoinMarketCap states. Additionally, it is facing a 1.20% decline over the last 24 hours. Conversely, the Bitcoin halving event is predicted to occur on April 19th.
