JPMorgan Expects Bitcoin Price to Drop to $42K After Halving

JPMorgan Anticipates Bitcoin Dropping to $42K

Global investment bank JPMorgan cautioned investors in a note published Thursday that the price of bitcoin could drop after the halving event in April.

The bank’s analysts estimate the average bitcoin production cost to be around $26,500 per BTC. This cost, they said, will “mechanically double” to $53,000 after the halving event. However, they also consider the potential impact of increased mining difficulty, which could force smaller miners out of the market. This scenario might lead to a 20% decrease in mining difficulty compared to initial estimates, ultimately lowering production costs.

“This 20% drop would bring the hashrate closer to its historical trend,” the analysts wrote, adding:

This would effectively cut the central point of our estimated production cost range to $42k. This $42k estimate is also the level we envisage bitcoin prices drifting towards once bitcoin-halving-induced euphoria subsides after April.

The JPMorgan analysts based their estimates on two key assumptions. The first is that post-halving electricity costs for miners will average 5 cents per kilowatt hour, a figure that can vary depending on location and scale. Second, as mining bitcoin becomes more energy-intensive after April, some private miners with less efficient equipment and limited access to capital will be forced out of the market as their production cost exceeds profitability. This exodus is expected to lead to a decrease in the hashrate by an estimated 20%.

Last month, the investment bank stated that the Bitcoin halving event and the next major upgrade of the Ethereum network are “largely priced in.” A recent JPMorgan survey of over 4,000 institutional traders found that 78% of respondents have no plans to trade crypto.

Do you think JPMorgan is right about bitcoin’s price falling to $42K after the halving event in April? Let us know in the comments section below.