Bitcoin’s decline is not over, according to JP Morgan

Analysts at leading US financial institution JP Morgan have expressed their opinion that there is still room for further decline in the price of the cryptocurrency Bitcoin (BTC). This assessment comes after Bitcoin reached new highs earlier this month, but since then it has been in a downward trend.

According to data from CoinGecko, the price of Bitcoin has fallen by 7.2% in the last week. However, analysts at JPMorgan believe the cryptocurrency remains overbought despite last week’s sharp decline. Its analysis is based on futures market conditions, specifically the premium of futures prices over spot prices and the prevailing conditions in the futures market.

In addition to overbought conditions, analysts have also observed a decline in money inflows into spot Bitcoin ETFs (exchange-traded funds). In fact, net outflows have continued since March 18, with the largest single-day outflow of $320 million occurring on March 19.

As evidenced by the withdrawals from Bitcoin ETFs, the combination of overbought conditions and waning investor interest has led JPMorgan analysts to conclude that further declines in the price of Bitcoin are likely. As the cryptocurrency market continues to grow, investors will be closely monitoring these developments to evaluate the future trajectory of Bitcoin and other digital assets.

As Bitcoin’s price continues to face downward pressure, analysts at JPMorgan have expressed confidence that profit-taking selling is likely to continue in the coming weeks. The prediction comes as the cryptocurrency market prepares for the highly anticipated Bitcoin halving event taking place in April.

The Bitcoin halving, which occurs approximately every four years, is a key design feature of the cryptocurrency. During this event, the reward paid to Bitcoin miners for verifying transactions is halved, effectively reducing the rate at which new Bitcoins are put into circulation.

Historically, Bitcoin halvings have been associated with increased price volatility and speculation. JPMorgan analysts suggest that many investors who have benefited from Bitcoin’s recent price rise may be willing to sell their positions ahead of the halving and lock in profits. This profit-taking behavior could contribute to further downward pressure on the cryptocurrency’s price.

Bitcoin price prediction by JP Morgan

JPMorgan estimates that the price of Bitcoin could fall to $42,000 after the halving.

In a recent analysis, JPMorgan estimated that the price of Bitcoin could potentially fall to around $42,000 following the upcoming halving event in April. The prediction is based on the bank’s assessment of Bitcoin production costs, also known as mining costs.

JPMorgan analysts note that, historically, the cost of producing Bitcoin has served as a lower bound for its price. In other words, the price of Bitcoin remains above the cost incurred by miners to create new coins. This relationship is due to the fact that miners are unlikely to sell their Bitcoin holdings for less than the cost of production, as doing so would result in a financial loss.

Given the impending halving event, JPMorgan analysts estimate that the reduction in mining rewards will effectively reduce the cost of producing Bitcoin to approximately $42,000. This estimate suggests that the price of Bitcoin could potentially fall to this level, as it would represent a new lower bound based on mining costs.

Current data from MacroMicro shows that the current cost of producing Bitcoin is just under $50,000. This implies that the halving event could significantly reduce production costs, resulting in downward pressure on the price of Bitcoin.

conclusion

In conclusion, JPMorgan analysts paint a cautious picture for Bitcoin’s near-term price outlook. Highlighting the cryptocurrency’s overbought situation, waning investor interest, and the possibility of continued profit making ahead of the April decline, he signals the possibility of further downward pressure on Bitcoin’s price.

Additionally, the bank’s analysis of the historical relationship between production costs and Bitcoin’s price level suggests that the upcoming halving could cause a significant decline in the cryptocurrency’s value, with a potential target of $42,000 based on estimated mining costs.