JP Morgan:BTC To See Strong Demand Before Halving
By Shubham Joshi
After a great start to 2023, Bitcoin (BTC) has recently come under some selling pressure. Over the last 24 hours, the BTC price has gained 2% hovering around $27,000. However,one of the world’s largest banks, JPMorgan, is certain that retail demand for Bitcoin will persist until the next halving, scheduled for mid-2024..
According to a research report published last week, JPMorgan strategists noted that over the following year, the retail demand for bitcoin will continue to be high.
The report also notes that Bitcoin Ordinals and the BRC20 tokens can be partially attributed for the recent increase in retail demand for Bitcoin.. The report further highlights:
“Retail investor demand for Bitcoin is likely to strengthen as we approach the April 2024 halving event.”
To be specific about what is halving..once every four years, there is a Bitcoin halving event that cuts the mining rewards in half by 50%. This “would mechanically double bitcoin production cost to around $40,000, creating a positive psychological effect”, JPMorgan analysts led by Nikolaos Panigirtzoglou wrote.
In the past, the production cost has effectively acted as a lower limit for Bitcoin’s price, the reports further noted.The financial behemoth stated that the previous halving events in 2016 and 2020 “were accompanied by a bullish trajectory for bitcoin prices” that accelerated after they took place.
On the other hand, the institutional demand for Bitcoin has been falling with investors being discouraged by “fraud, heightened volatility, and a year-to-date US regulatory assault” leading to growing uncertainty in the market.
JPMorgan highlighted that both gold and Bitcoin had increased in value during the US banking crisis earlier this year. This is due to the fact that institutional investors favored purchasing Gold, whereas retail consumers bought Bitcoin as “hedges against a catastrophic scenario.”
While the BTC price showed little volatility and consolidated around $27,000 last month in May, the Bitcoin network saw a major boost in activity driven by Bitcoin Ordinals and other Bitcoin-based memecoins such as Pepecoin (PEPE).
As a result, Bitcoin gas fees skyrocketed significantly, forcing crypto exchange Binance to temporarily halt Bitcoin withdrawals. Now, Bitcoin programmers are debating whether to cease promoting Bitcoin-based memecoins that led to a massive frenzy and stop the usage of Bitcoin for payments and as a store of value.
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