The bank’s 2024 crypto prospect is watchful, with Bitcoin over-purchased amidst ‘extreme hope’ regarding a spot Bitcoin ETF acceptance.
JP Morgan has dashed the hopes of a crypto bull run in 2024. The bank’s analysts have taken a ‘watchful’ position in their crypto prospect. In a newly published report, analysts led by Nikolas Panigirtzoglu claimed that Bitcoin halving is ‘mainly priced in.’ This is due to the halving event and its impact on the supply of Bitcoin being ‘foreseeable and properly considered in the present Bitcoin price.’
The team claimed that on the basis of the present Bitcoin hash rate as well as the mining struggle, miners’ production cost would increase from the current $22000 to nearly $440000 after halving. The present price of Bitcoin of nearly $42000 corresponds to a 5% reduction in the hash rate after having, which ‘appears to be quite low.’ Further, the team expects the hash rate to drop by 20% while miners with greater overheads will leave the market.
Ethereum Destined to Outperform Bitcoin
The 2020 halving resulted in Bitcoin’s price and the production cost of miners acquiring a 1:1 ratio, while the present worth of Bitcoin is nearly two times the cost of production. These two indicate that next year’s halving is mainly priced in.
The report showed that Ethereum could ‘outdo’ Bitcoin next year. It highlighted the EIP-4844 ‘Protodanksharding’ improvement as a likely catalyst. However, it highlighted the issue of staking centralization on the Ethereum platform.
The report warned that it is ‘quite early to be enthusiastic’ about an NFT (nonfungible token) or DeFi (decentralized finance) activity restoration. It highlighted the ‘inspiring’ rise of decentralized finance chains such as SUI, Pulsechain, and Aptos. Further, the report pointed to the ‘fresh interest’ in nonfungible tokens caused by the rise of Bitcoin Ordinals.
A Bitcoin ETF failure?
JP Morgan analysts were doubtful that the long-expected spot Bitcoin exchange-traded funds’ (ETFs’) approval would introduce more capital to the market. The report highlighted the absence of interest from Canadian and European investors in already-approved spot exchange-traded funds.
Besides, it cited the possibility that capital would shift from current Bitcoin products to spot Bitcoin exchange-traded funds, for instance, Bitcoin futures ETFs, Grayscale Bitcoin Trust (GBTC), and Bitcoin mining firms.
The report claimed that up to $2.7B could leave Grayscale Bitcoin Trust after its change to a spot Bitcoin exchange-traded fund, while investors will pocket profits. The analysts claimed that in case the funds leave the market instead of shifting to other Bitcoin instruments, it would ‘put extreme downward pressure’ on Bitcoin’s price.
JP Morgan and Crypto
The report comes only a week after Jamie Dimon, the company’s chief executive officer, attended a Senate Banking Committee hearing to criticize crypto. He claimed that in case he were the United States government, he would ‘shut it down.’ Dimon said that tax avoidance, drug traffickers, criminals, and money laundering are crypto’s actual use cases.
Dimon affirmed that he has always opposed crypto and urged a crackdown on its destructive nature. The executive pronouncement contradicts the initiatives unveiled by JPMorgan in preparation for tokenized market opportunities.
The Wall Street titan confirmed expanding its digital assets team, perhaps in preparation for an uptick in crypto activity as traditional financial institutions embrace the spot Bitcoin ETFs.
Editorial credit: Sergei Elagin / Shutterstock.com