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rises above $63,000 as halving approaches From Investing.com
Investing.com– The price fell slightly on Thursday, extending recent declines as cryptocurrency markets saw limited relief as longer-term higher U.S. interest rates hit risk appetite.
Attention was also focused on the halving event, which seemed imminent, and what its effects would be on the long-term supply of Bitcoin.
Over the past 24 hours, as of 1:54 PM ET (6:54 PM GMT), Bitcoin fell 0.3% to $63,103.5.
Bitcoin could collapse after halving event, says JPMorgan
Attention is now focused directly on the halving event, which should occur with the generation of block no. 840,000 on the Bitcoin blockchain. It was less than 300 blocks away from hitting the block, with the halving expected by April 20th.
The event will reduce the pace at which new Bitcoin is mined, effectively halving the rewards for miners.
The halving strengthens the argument that Bitcoin scarcity will help support the token’s prices.
But while the token has appreciated significantly over the past 12 years, there appear to be few direct links between the last three halving events and Bitcoin’s immediate price gains.
External factors, such as interest rates and risk appetite, appear to have played a larger role in Bitcoin’s price trajectory, especially given its tendency to track U.S. tech stocks.
While most of Bitcoin’s gains this year have been driven by the US approval of ETFs, this momentum now appears to be running out of steam.
The token, along with the broader crypto space, has primarily thrived in low interest rate and high liquidity environments, a scenario that will likely materialize later, rather than earlier, in 2024.
According to JPMorgan, BTC is more likely to experience downward pressure after the halving.
The bank expects a decline due primarily to current overbought market conditions, highlighted by their analysis of open interest in bitcoin futures.
Additionally, the cryptocurrency’s current price exceeds JPMorgan’s volatility-adjusted comparison to gold, which it places at $45,000, as well as its expected production cost of $42,000 after the halving. Historically, the cost of producing bitcoin has served as a lower bound for its prices.
Furthermore, the Wall Street giant highlighted that venture capital funding for the cryptocurrency sector remains low, despite the recent market recovery. The firm believes that mining companies will feel the most significant impact of the halving.
“As unprofitable bitcoin miners abandon the bitcoin network, we expect a significant decline in hashrate and consolidation among bitcoin miners with a higher share for publicly traded bitcoin miners,” the analysts said.
“After the halving event, it is also likely that some bitcoin mining companies may seek to diversify into low-energy cost regions such as Latin America or Africa to deploy their inefficient mining facilities to gain recovery values from those facilities that would otherwise remain idle,” they said. added.
Cryptocurrency price today: rate nervousness persists
Broader cryptocurrency prices posted sustained losses as traders further scaled back expectations for a June interest rate cut by the Federal Reserve. This came on the heels of strong inflation data and aggressive signals from Fed officials.
Cryptocurrency prices took little advantage of the dollar’s slight decline, as traders locked in profits at the greenback’s 5-1/2-month highs.
The No. 2 cryptocurrency fell 1.1% to $3,039.28, while it rose 0.22% and gained 0.5%.
Gains in the cryptocurrency sector this year have been largely skewed in favor of Bitcoin, following the approval of spot ETFs. Bitcoin represents over 55% of the overall value in the cryptocurrency market.