The event will double the bitcoin production cost to around $40,000, creating a positive psychological effect, the report said.
Retail demand for bitcoin (BTC) is likely to remain strong over the coming year ahead of the next halving event for the world’s largest cryptocurrency, JPMorgan (JPM) said in a research report Thursday.
Recent increase in retail demand can be partly attributed to the advent of Bitcoin Ordinals and BRC-20 tokens, the report said, but more importantly “retail investor demand for bitcoin is likely to strengthen as we approach the April 2024 halving event.”
Bitcoin halving, when mining rewards are cut by 50%, “would mechanically double bitcoin production cost to around $40,000, creating a positive psychological effect,” analysts led by Nikolaos Panigirtzoglou wrote.
This is because historically the production cost has acted as an effective lower boundary to the cryptocurrency’s price, the report added.
Previous halving events in 2016 and 2020 “were accompanied by a bullish trajectory for bitcoin prices” that accelerated after they occurred, the bank noted.
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Source: Vietnam Insider