- The Bitcoin halving will take place on Friday or Saturday, but JPMorgan says the halving could continue after that.
- The bank's analysis of Bitcoin futures finds that Bitcoin is in overbought territory.
- Mining companies will feel the pinch after the halving and the sector could be restructured.
The long-awaited Bitcoin halving bell is here, but don't bet on another rapid rally just yet — JPMorgan says the price of the world's largest cryptocurrency could fall immediately after the event Masu.
The quadrennial halving is scheduled for around April 19-20, when the amount of rewards for miners will be cut in half and the amount of new Bitcoin in circulation will be reduced. The market widely expected this event to be a bullish trigger and help the token reach all-time highs in 2024.
“We do not expect an increase in Bitcoin price post-halving as it is already priced in. In fact, we believe there will be downside to Bitcoin price post-halving for several reasons. ” analysts led by Nikolaos Panigirtzoglou wrote in a note this week.
First, JPMorgan stated that the Bitcoin market remains high in overbought territory after hitting an all-time high in March. Panigirtzoglou previously pointed to several indicators that support this.
“There is still considerable optimism in the market about the prospects for significant price increases by the end of the year, and a large part of that optimism is due to the continued growth of Bitcoin through spot ETFs, even as Bitcoin supply declines. This stems from the view that demand for Bitcoin will continue at the same pace “after the halving event,” he said in a separate note at the end of March.
JPMorgan also sees venture capital funding remaining low despite the recent resurgence in the crypto market, which is also a headwind for prices.
“We have previously argued that a recovery in crypto VC flows is a necessary condition for a sustained recovery in the crypto market, and as such, the subdued VC flows since the beginning of the year are I think this poses a downside risk.”
Analysts said mining companies would be hit after the halving, while some may relocate to improve efficiency in the face of the prospect of lower pay. Other companies may consolidate and merge with larger listed miners.
“Following the halving event, some Bitcoin mining companies are deploying inefficient mining rigs to regions with lower energy costs, such as Latin America and Africa, in order to capture salvage value from their idle rigs. There is also a possibility that they will try to diversify their operations.” analysts wrote.
