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Unveiling insights from their recent study, financial experts at JPMorgan have unveiled a robust forecast for Bitcoin's retail interest in anticipation of its next halving event in April 2024. The report suggests that Bitcoin Ordinals and BRC-20 tokens, freshly introduced into the crypto market, contribute to the increased retail interest.
The forthcoming halving event is anticipated to inflate Bitcoin's production cost to an estimated $40,000. This perceived increase is expected to bolster a positive sentiment among crypto enthusiasts. Drawing insights from historical patterns, JPMorgan's team observed that production costs have traditionally set a floor for Bitcoin's price. Furthermore, they pointed out that previous halving occurrences in 2016 and 2020 increased Bitcoin's market value.
However, contrasting patterns are seen in institutional demand for Bitcoin, which appears to have waned due to worries surrounding fraud, erratic price changes, and an unclear regulatory environment. Despite these hurdles, the retail sector regards Bitcoin as a promising investment avenue. An earlier study by JPMorgan pointed out that gold and Bitcoin experienced an uptick after the downfall of Silicon Valley Bank. While institutions were inclined toward gold to shield their assets in crises, retail investors leaned into Bitcoin.
The impending halving and the predicted rise in production costs are forecasted to further stoke retail fascination with Bitcoin in the run-up to April 2024.
Bitcoin halving is a predetermined event in the Bitcoin network that reduces the rewards for mining new blocks by 50%. Occurring approximately every four years, this event is significant because it controls the rate at which new bitcoins are created, effectively controlling inflation in the cryptocurrency's ecosystem. Crypto enthusiasts view it as a crucial phase as it often positively impacts Bitcoin's price, given that lower supply with sustained or increasing demand often leads to a rise in value.
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