JPMorgan: Bitcoin May Fall to $42,000 Level After the End of the “Halving Frenzy” in April

JPMorgan: Bitcoin May Fall to $42,000 Level After the End of the "Halving Frenzy" in April

JPMorgan: Bitcoin May Fall to $42,000 Level After the End of the "Halving Frenzy" in April

The upcoming halving event in April is expected to reduce the rewards for Bitcoin miners from the current 6.25 BTC per block to 3.125 BTC. In a report released on Wednesday, Morgan Stanley analyst Nikolaos Panigirtzoglou stated that this halving event will have a negative impact on miners’ profitability, leading to an increase in Bitcoin production costs and subsequently affecting the market price of Bitcoin. The analyst predicts that the price of Bitcoin will drop to $42,000 after the halving.

In the report, the analyst further added that due to the decrease in profitability and resulting lower efficiency, less efficient mining machines may exit the mining business. This could result in a 20% decline in the network’s computing power after the halving, further reducing the estimated center point of production costs from $53,000 to $42,000 (based on an average electricity cost of $0.05 per kilowatt-hour). The analyst stated:

On the other hand, the analyst also expressed concerns about the concentration risk among Bitcoin miners on the network after the halving. The analyst stated that after the halving, publicly listed Bitcoin miners are likely to have a higher market share as they would lower their overall costs to protect profitability. Additionally, there may be horizontal integration through mergers and acquisitions among Bitcoin miners in different regions to leverage synergies in their operations.