JPMorgan
Two of America’s largest banks are urging crypto investors to remain cautious around the upcoming Bitcoin halving, which analysts believe may not play out much like prior cycles.
In a Wednesday report, JPMorgan predicted that Bitcoin’s price will not rise following the event, and is more likely to resume declines that began earlier this month.
The bank’s outlook remains consistent with its relatively bearish forecasts throughout the year, refusing to be swayed by growing optimism around Bitcoin spot ETFs or the halving.
“We do not expect bitcoin price increases post-halving as it has already been priced in,” wrote analysts led by Nikolaos Panigirtzoglou. “In fact, we see a downside for the bitcoin price post-halving for several reasons.”
The analyst used the price of gold as a reference point, as both assets share a similar investment thesis as a risk-off store of value and inflation hedge. On a volatility-adjusted basis, the bank argued that Bitcoin’s price should only be $45,000, meaning its current market price ($63,700) is significantly overbought.
Backing their case is a continuing long bias in Bitcoin futures open interest, and lack of venture funding in the crypto industry this year.
“The technical picture for bitcoin is rather worrying, as we saw no rebound after the price drop on Friday and Saturday,” added Alex Kuptsikevich, FxPro’s senior market analyst, in an email to Forbes. “On the contrary, the market seems to be getting used to current prices in anticipation of a halving.”
In a note to clients last week, Goldman Sachs acknowledged that Bitcoin’s past three halving cycles have resulted in massive price run-ups in the aftermath – though the exact time it took to reach a new al time high afterward has differed greatly.
This cycle looks even more different: Bitcoin already topped its previous cycle’s all-time high above $69,000 in March, one month before the halving even occurred.
“Caution should be taken against extrapolating the past cycles and the impact of halving, given the respective prevailing macro conditions,” analysts said.
The halving itself is due later this week, expected on April 20 at 01:44 UTC. Whether or not it results in a “buy the rumor, sell the news” event in the short term, Goldman thinks BTC’s immediate price action is hardly relevant.
“Bitcoin price performance will likely continue to be driven by the said supply-demand dynamic and continued demand for bitcoin ETFs, which combined with the self-reflexive nature of crypto markets is the primary determinant for spot price action,” the bank said.