‪JPMorgan: Bitcoin Could Correct Downwards to as Low as $42,000 in April

Bitcoin has maintained a largely positive momentum since the second half of February. With the apex cryptocurrency hitting new milestones, the collective sentiment amongst market players is largely bullish.

However, JPMorgan is presenting a different outlook for market players. According to a strategist, an upcoming event might trigger a bearish correction that could send Bitcoin’s price down to as low as $42,000 by next month.

The occasional Bitcoin halving event, expected to take place this April, has historically benefited the asset’s price. However, JPMorgan analysts analysts led by Nikolaos Panigirtzoglou believe the result might not be as beneficial for Bitcoin.

Designed to reduce the number of Bitcoin issued by miners, this year’s halving will reduce coins by an estimated 450 and increase mining difficulty. A strategist at JPMorgan stated that the average Bitcoin production cost of $26,500 will increase to $53,000 after the halving event.

The strategist explained that increased mining difficulty might send smaller miners out of the industry. This could result in a reduction in difficulty by 20% than previous estimates. While this could reduce production costs, the lower bound will lose support and possibly push Bitcoin’s price backwards.

Analyst gives reasons for pessimistic outlook

He cited post-halving electrical cost for miners, estimated to sit at 5 cents per kilowatt hour depending on scale and location, supporting his position.

Additionally, the energy required to mine Bitcoin after April is bound to increase. Private miners might risk getting swept out of the market as their machines might not have the capacity to sustain mining activities. The strategist estimates a 20% decrease in Hashrate if production cost and mining capital drop as miners flee the scene.

The analyst expects the asset’s value to drop toward the $42,000 price level after April. However, he does not disclose an expected timeframe for the asset to make a potential upward correction.

“This 20% drop would bring the hashrate closer to its historical trend. This would effectively cut the central point of our estimated production cost range to $42k. This $42k estimate is also the level we envisage Bitcoin prices drifting towards once Bitcoin-halving-induced euphoria subsides after April.” The strategist asserted.

Should Bitcoin move as predicted, the asset would lose around 32% of its current price value. Notably, Bitcoin was trading at $61,479 at report time. Over the past month, Bitcoin has recorded a 47% increase in price value, resulting in a YTD high of $63,585.

On-chain metrics have validated the asset’s current price performance as network activities skyrocketed. As Santiment recently reported, wallets with 1k to 10k BTC have slightly dropped, while wallets with 100k and 1k BTC have soared. The network’s non-0 wallets increased by 0.36% within 48 hours.

Similarly, ETF inflows have consistently surpassed outflows over the past month. Analysts expect this trend to continue with the introduction of new and existing institutional investors.