Bitcoin: big correction? After April halving, JPMorgan estimates $42,000 decline.

On Thursday, Bitcoin reached $63,000, its highest price in two years, but JPMorgan analysts predict a halving event could lower prices to $42,000.

“The Bitcoin production cost has empirically acted as a lower bound for Bitcoin prices,” the analysts said Wednesday, projecting such costs might double to $53,000 after halving. This might lower Bitcoin's hashrate by 20%, reducing the number of miners vying to produce Bitcoins.

The analysts argued that Bitcoin prices will meander around $42,000 after April, as Bitcoin-halving-induced euphoria subsides. Mining incentives will drop from 6.25 to 3.125 Bitcoins each block during the half, planned on April 19, to halt coin production. Due to rising production costs, fewer miners can stay profitable, which can raise Bitcoin prices.

“There could also be some horizontal integration via mergers and acquisitions among Bitcoin miners across regions to take advantage of synergies in their businesses,” JPMorgan analysts said, saying that publicly traded miners' hashrate would rise.

Bitcoin is approaching its all-time high of $69,000, which has tired crypto services like Coinbase, which experienced disruptions due to app and site traffic. However, JPMorgan's pessimistic projection may cast doubt on this upward trend.

“We expect consolidation,” Marathon Digital Holdings CEO Fred Thiel told Fortune. He says that 10% to 25% of miners—likely smaller players—will go offline. Thiel expects some to return after cost optimization.

Whether the increased production costs will hurt miners depends on Bitcoin's price, but “even if the reward price drops 50%, if Bitcoin's price goes to $100,000, they're still going to be making the same amount of money after a couple of months past the halving,” said Luxor's head of marketing Alessandro Cecere.

After the three previous halvings in 2008, 2012, and 2016, hashrate dropped before recovering. Like JPMorgan, Galaxy Digital CEO Mike Novogratz told Bloomberg TV on Thursday: “I would say we’ve gotten to very frothy, frothy levels.”

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