Analysts at JP Morgan believe that the retail investor’s resolve to hoard bitcoin will only strengthen as we get closer to the next halving in mid-2024.
After a strong start to the year 2023, bitcoin (B T c) has been facing selling pressure since last few weeks. In the last 24 hours, the price of BTC dropped by 2% to below $27,000. However, the banking giant JP Morgan There is confidence that bitcoin will continue to see retail demand until its next event in mid-2024. In a research report published last Thursday, JP Morgan strategists noted that retail demand for bitcoin will remain strong over the next year.
The report also states that the recent retail demand for bitcoin can be partly attributed to bitcoin ordinals and the BRC20 token. but it further They say,
“Retail investor demand for bitcoin is likely to strengthen as we get closer to the April 2024 halving event.”
The bitcoin halving event occurs once every four years and halves bitcoin mining rewards by 50%. “This would mechanically double bitcoin production costs to around $40,000, creating a positive psychological effect,” wrote JP Morgan analysts led by Nikolaos Panigirtzoglu.
The report states that historically, the cost of production has acted as an effective lower limit for the price of bitcoin. The banking giant explained that the previous halving events of 2016 and 2020 were “with a bullish trajectory for bitcoin price” that accelerated after they occurred.
On the other hand, institutional demand for bitcoin is falling with investors discouraged by “fraud, increased volatility, and year-on-year US regulatory onslaught,” adding to the uncertainty in the market.
JP Morgan noted that after the banking crisis in the US earlier this year, both gold and bitcoin rallied. This is because institutional investors preferred to buy gold while retail bought bitcoin as a “hedge against a catastrophic scenario”.
Bitcoin Coders to Crush Memecoins
While the price of BTC showed little volatility and consolidated around $27,000 in May last month, the bitcoin network saw a huge boost in activity powered by bitcoin ordinals and other bitcoin-based memecoins such as pepecoin.pepe,
This led to a massive jump in bitcoin gas fees, forcing crypto exchange Binance to temporarily halt bitcoin withdrawals. Now, bitcoin coders are considering whether to stop supporting the bitcoin-based memecoin, which caused a mass hysteria and hindered bitcoin’s use for payments and as a store of value. Is.
Bitcoin developer Ali Sherif said:
“I think the system is being abused. Bitcoin was never intended to serve as a base layer for meme tokens.”
He couple that “worthless tokens threaten the smooth and normal use of the bitcoin network as a peer-to-peer digital currency”.
Bhushan is a FinTech enthusiast and has a great understanding of the financial markets. His interest in economics and finance drew his attention to the newly emerging blockchain technology and cryptocurrency markets. He is in the process of continuous learning and keeps motivating himself by sharing his acquired knowledge. In his spare time he reads thriller fiction novels and occasionally explores his culinary skills.
Bitcoin Crypto Related Post