JP Morgan analysts believe retail investors will become more and more determined to accumulate bitcoin as the next halving in mid-2024 approaches.
After a strong start to 2023, Bitcoin (BTC) has faced some selling pressure in recent weeks. In the last 24 hours, BTC price has plunged 2% below $27,000. However, banking giant JP Morgan is confident that retail demand for Bitcoin will continue until the next halving event in mid-2024. In a research report released last Thursday, JP Morgan strategists noted that retail demand for bitcoin will remain strong next year.
The report also notes that some of the recent retail demand for bitcoin may be due to bitcoin ordinals and BRC20 tokens.but it further add:
“As the April 2024 halving event approaches, retail investor demand for bitcoin is likely to grow even stronger.”
The Bitcoin halving event takes place once every four years, when Bitcoin mining rewards are cut in half by 50%. JPMorgan analysts, led by Nikolaos Panigirtzoglou, said this would “mechanically double the cost of Bitcoin’s production to around $40,000 and have a positive psychological effect.”
The report added that historically, the cost of production has served as an effective floor for Bitcoin prices. The banking giant noted that past halving events in 2016 and 2020 were “with a bullish trajectory for the Bitcoin price,” which accelerated after the halving occurred.
Meanwhile, institutional demand for Bitcoin is declining, with investors discouraged by “fraud, increased volatility and US regulatory attacks since the beginning of the year,” adding to market uncertainty. .
JP Morgan noted that both gold and bitcoin rose following the US banking crisis earlier this year. This is because institutional investors preferred to buy gold, while retail investors bought bitcoin as a “hedge against a catastrophic scenario”.
Bitcoin Developers Smash Meme Coins
While the BTC price showed little volatility and stabilized around $27,000 last month in May, the Bitcoin network has been hit by other Bitcoin-based memecoins such as Bitcoin Ordinal and Pepecoin (PEPE). Activity has increased significantly.
As a result, Bitcoin gas prices have skyrocketed, forcing cryptocurrency exchange Binance to temporarily suspend Bitcoin withdrawals. Bitcoin developers are currently debating whether to stop supporting Bitcoin-based memecoins, which have caused mass frenzy and disrupted the use of Bitcoin as a means of payment and store of value.
Bitcoin developer Ali Sheriff said:
“I think this system is being abused. Bitcoin was never meant to serve as a base layer for meme tokens.”
he Added “Valueless tokens threaten the smooth and successful use of the Bitcoin network as a peer-to-peer digital currency.”
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Bhushan is a fintech enthusiast and has a great knack for understanding financial markets. His interests in economics and finance have drawn attention to the emerging blockchain technology and cryptocurrency market. He continues his learning process continuously and keeps himself motivated by sharing his knowledge. In his free time, he enjoys reading thriller novels and occasionally testing his cooking skills.