Pre-Halving Effect Reflected in Bitcoin’s Current Price: JPMorgan

• JPMorgan claims that Bitcoin’s halving in April 2024 is already reflected in its price, and that a significant drop could be imminent.
• JPMorgan also says that retail investors are driving the recent rally to $52,000, but that the upside is limited from here.

Bitcoin is expected to undergo its fourth halving in April 2024, which will reduce the block reward from 6.25 BTC to 3.125 BTC, making new coins scarcer and more valuable. Amidst this, JPMorgan said that its upcoming halving in April 2024 is already factored into its price, and that a significant drop could be imminent. 

The bank also said that retail investors are driving the recent rally to $52,000, but that the upside is limited from here. Historically, Bitcoin has experienced massive price increases in the months leading up to and following its halvings, as investors anticipate higher demand and lower supply.

However, JPMorgan analysts, led by Nikolaos Panigirtzoglou, argue that this time is different, and that the halving effect is already priced in. They point to the data that shows that the flow of Bitcoin from smaller wallets, typically associated with retail traders, has outstripped that from larger wallets, usually linked to institutional investors. 

They also note that the inflows into new spot Bitcoin ETFs, which offer exposure to Bitcoin without holding it directly, have not been enough to offset the selling pressure from miners and other sellers.

Nikolaos Panigirtzoglou, JPMorgan strategist, said:

“The revival of the retail impulse in February perhaps reflects the anticipation of three main crypto catalysts over the coming months: the Bitcoin halving event, the next major upgrade of the Ethereum network and the prospect of approval of spot Ethereum ETFs by the Securities and Exchange Commission in May. We believe that the first two catalysts are largely priced in, while for the third catalyst, we see only a 50 per cent chance.”

Bitcoin Faces Risk

The bank’s pessimistic view comes as Bitcoin is struggling to maintain its momentum above $51,000, after reaching a new all-time high of $52,661 on February 15. If this trend continues, Bitcoin could record its first weekly loss since late January, when it dipped below $30,000.

According to JPMorgan, Bitcoin could face a major correction in the near future, as the market is overbought and the demand from institutional investors is not strong enough to sustain the rally. The bank also said that Bitcoin’s volatility, which has increased in recent weeks, makes it less attractive as an alternative asset class.

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