JPMorgan Sees Strong Retail Demand for Bitcoin Ahead of Halving 2024
Over the last few weeks, the world’s largest cryptocurrency Bitcoin (BTC) has entered a phase of consolidation and has been hovering around $27,000. Recently, the BTC price has also come under some selling pressure amid uncertain macro environment in the market.
But in their latest research report, banking giant JPMorgan noted that the retail demand for Bitcoin continues to remain strong over the coming year before the next halving event in mid-2024. The Bitcoin halving takes place once every four years that cuts the miners rewards into half I.e. by 50%.
Throughout this year, small Bitcoin addresses have been accumulating BTC periodically at every stage. In its report, JPMorgan noted that the recent surge in retail demand could be partly attributed to strong demand for Bitcoin Ordinals as well as the BRC20 tokens. But more importantly “retail investor demand for bitcoin is likely to strengthen as we approach the April 2024 halving event,” it noted.
JPMorgan analysts led by Nikolaos Panigirtzoglou wrote that Bitcoin halving “would mechanically double bitcoin production cost to around $40,000, creating a positive psychological effect”.
The banking giant stated that historically, the Bitcoin production cost has served as an effective lower boundary to the cryptocurrency’s price. Previous halving events in 2016 and 2020 “were accompanied by a bullish trajectory for bitcoin prices” that accelerated after they occurred, noted the bank.
On the other hand, the institutional demand for Bitcoin has been falling with investors discouraged by “fraud, heightened volatility and a year-to-date U.S. regulatory assault”. Previously, JPMorgan had also added that both Bitcoin and Gold have rallied strongly following the collapse of the Silicon Valley Bank. In this case, the institutional players chose gold while retail players opted for Bitcoin as “hedges to a catastrophic scenario”.
In another news, JPMorgan has joined hands with six major Indian banks for introducing a blockchain-based platform to make interbank settlements in dollar transactions in the nation’s newest international financial hub - GIFT City.
JPMorgan’s own banking unit at GIFT City along with five major private players - HDFC Bank Ltd., ICICI Bank Ltd., Axis Bank Ltd., Yes Bank Ltd. and IndusInd Bank Lt - will take part in these blockchain-based settlements.
Kaustubh Kulkarni, senior country officer, India and vice chairman, Asia Pacific at JPMorgan, said: “We will be running a pilot project for the next few months as we need to analyze banks’ experience. By leveraging blockchain technology to facilitate transactions on a 24x7 basis, processing is instantaneous and enables GIFT City banks to support their own time-zone and operating hours”.