JPMorgan predicts Bitcoin correction once halving euphoria cools
A Bitcoin code update in April called “the halving” that will reduce the amount of tokens issued daily by half to about 450 is being cited by advocates as leading to a supply shortage. Bitcoin has jumped about 45% this year to around $62,000, with demand surging from exchange-traded funds approved in January.
The price of Bitcoin has historically increased after a halving event, with so-called miner production cost functioning as a lower bound to the price of the asset. Average Bitcoin production cost currently sits at $26,500 per Bitcoin which would “mechanically double” post-halving to $53,000, according to strategist at JPMorgan Chase & Co.
However, as increased mining difficulty pushes smaller miners out of operation, mining difficulty could be 20% lower than originally estimated, bringing down production costs. With less support in the lower bound, investors may see Bitcoin’s price drifting back toward $42,000 after April, the strategists wrote Thursday.
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Strategist estimates are based on two key assumptions. First, post-halving electricity cost for miners is estimated at an average of 5 cents per kilowatt hour, which can vary depending on location and scale. Second, as mining Bitcoin becomes more energy intensive after April, some private miners with less-efficient fleets of machines and little access to
