Bitcoin’s recent excitement is partly due to new Bitcoin ETFs and an upcoming “halving” event in April. This event is set to slash the Bitcoin supply by half, potentially lifting its price.
The halving will also cut the rewards for miners, affecting their profits as costs rise.
Business Insider reports that JPMorgan views this event as a risk for Bitcoin, which has just breached $65,000 for the first time in two years.
The firm believes that the price support from production costs might weaken after the halving.
JPMorgan predicts Bitcoin could fall to $42,000, losing over 33% of its recent $65,200 high post-halving.
The forecast hinges on the bitcoin network’s hash rate, or the power for processing transactions, which might drop 20% after the halving.
This drop would likely push less efficient miners out of the market.
JPMorgan analysts explain, “A 20% hash rate drop brings it back to its usual trend.” They add, “This adjustment could lower our estimated production cost to $42,000.”
They also expect Bitcoin’s price to stabilize at $42,000 as the halving hype fades.
Despite these predictions, bitcoin demand appears strong. Following several ETF launches, Bitcoin’s accessibility has improved.
BlackRock’s Bitcoin ETF recently attracted $520 million in a day, a near-record for U.S. funds, as investors continue to pursue Bitcoin’s gains past $60,000.
This trend shows the ongoing investor interest in Bitcoin, even with potential price adjustments on the horizon.