This week, the price of Bitcoin rose back above $20,000 but failed to maintain the momentum. What is the forecast of JPMorgan
By iProfessional
17/07/2022 – 10,28hs
Bitcoin continues to struggle to break above support at $21,000. LRecession fears continue to weigh on the markets and this week, the price of Bitcoin rose back above $20,000 but failed to maintain momentum.
Under this scenario, some investors say that they are not yet ready to say that the bottom of the market has been reached and others identify what they call “a great opportunity”. However, the renowned investment bank JPMorgan took a stand and wrote a harsh report about what to expect in cryptocurrencies.
JPMorgan analysts warned that the cost of producing Bitcoin dropped by more than $10,000 per bitcoin in just over a month. For this reason, they believe that $160 billion could be eliminated from the market capitalization of the almost $400 billion that bitcoin holds today.
Bitcoin: what is the JPMorgan forecast
Bitcoin: what is the JPMorgan forecast
“Some market participants perceive the cost of production as the lower limit of the bitcoin price range in a bear market. “JPMorgan strategists led by Nikolaos Panigirtzoglou wrote in a note this week that was first reported by Bloomberg.
The cost of “mining” a Bitcoin has plummeted by more than $10,000. From $24,000 in early June to around $13,000 today, according to JPMorgan estimates. “Driven almost entirely by declines in electricity use as approximated by the Cambridge Bitcoin Electricity Consumption Index (CBECI),” they added.
For the experts, a drop to $13,000 would represent a further 35% price drop from the current level of $20,000. This bitcoin price has remained average since breaking down from the previous support level of $30,000 in early June. That increased the pressure on crypto companies facing a liquidity crisis. Bitcoin’s closely watched $20,000 price level is psychologically important as it was the peak of the late 2017 bitcoin bull run.
“While it clearly helps miner profitability and potentially reduces pressures on miners to sell their bitcoin holdings to increase liquidity or deleverage, the decrease in the cost of production could be perceived as negative for the bitcoin price outlook. bitcoin in the future,” the analysts wrote.
Bitcoin: the behavior of the markets
Bitcoin: the behavior of the markets
JPMorgan’s latest warninge comes after the bank said last month that so-called bitcoin miners, Using high-powered computers to protect the bitcoin network in exchange for newly minted coins, they could be forced to sell their bitcoin to cover costs, which could drive up the lower price.
The bitcoin price plunged around 70% after reaching an all-time high of nearly $70,000 in November last year.. Thus, it fell along with stock markets as the US Federal Reserve and other central banks around the world grapple with skyrocketing post-Covid-19 inflation, lockdowns and historic stimulus measures.
“With the US consumer price index data for June that show an increase of 9.1% over last year, the corresponding drop in the price of bitcoin reflects a trend we’ve seen in recent months where the price of bitcoin largely moves in tandem with traditional financial markets,” said Matt Senter, chief technology officer at bitcoin rewards app Lolli.
“We will only see a decoupling of bitcoin price from traditional financial markets once there is more adoption and widespread understanding of bitcoin not only as a store of value, but also as a means of payment and a way to strengthen our legacy monetary systems,” Senter concluded.