JPMorgan Reveals $ 160 Billion Bitcoin Bomb

BitcoinBTC
has struggled this week as fears of recession continue to weigh on markets and crypto traders were branded “crazy”.

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The Bitcoin price rose back to over $ 20,000 per bitcoin, but has not managed to maintain momentum with some investors saying they are not yet ready to call [market] bottom and others who identify what they call “a massive opportunity.”

Now JPMorgan analysts have warned that bitcoin’s production costs have fallen by just over $ 10,000 per bitcoin in just over a month – something they believe could potentially wipe out $ 160 billion from bitcoin’s market value of nearly $ 400 billion.

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“The cost of production is perceived by some market participants as the lower limit of bitcoin’s price range in a bear market,” JPMorgan strategist led by Nikolaos Panigirtzoglou wrote in a note this week first reported by Bloomberg.

The cost of “mining” a bitcoin has crashed above $ 10,000, from $ 24,000 in early June to around $ 13,000 now, according to JPMorgan estimates, “almost exclusively driven by the decline in electricity usage as proxied by Cambridge Bitcoin Electricity Consumption Index (CBECI). ” A drop to $ 13,000 will represent another 35% price crash from the current $ 20,000 level.

The Bitcoin price has hovered around $ 20,000 per bitcoin since it crashed from its previous support level of $ 30,000 in early June, increasing pressure on crypto companies facing a liquidity crisis. The closely monitored bitcoin price level of 20,000 dollars is psychologically important since it was the peak of the bitcoin bull run at the end of 2017.

“While it clearly helps the miner’s profitability and potentially reduces the pressure on miners to sell bitcoin holdings to provide liquidity or for lending, the decline in production costs may be perceived as negative for the bitcoin price outlook going forward,” the analysts wrote.

The latest warning from JPMorgan comes after the bank said last month that so-called bitcoin miners – who use powerful computers to secure the bitcoin network in exchange for fresh coins – could be forced to sell bitcoin to cover costs, and potentially pressure the price. Lower.

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The Bitcoin price has crashed by around 70% after reaching an all-time high of almost 70,000 dollars in November last year, and collapsed with the stock markets while the US Federal Reserve and other central banks around the world are fighting sky-high inflation in the wake by Covid. -19 pandemics, shutdowns and historic stimulus measures.

“With June’s US consumer price index data showing a 9.1% increase from last year, bitcoin’s corresponding price decline reflects a trend we have seen in recent months where bitcoin’s price has moved largely in line with traditional financial markets,” Matt Senter, chief . technology manager at the bitcoin rewards app Lolli, wrote in comments via email.

“We will only see a disconnection of the price of bitcoin from the traditional financial markets when there is greater mainstream adoption and understanding of bitcoin as not just a value store, but a payment rail and a way to strengthen our old monetary systems.”