As Bitcoin (BTC) hovers within the $50,000-$52,000 range, market participants anticipate a surge leading up to the upcoming Bitcoin halving for April 2024. However, JPMorgan, a prominent financial institution, contends that the halving’s impact has already been accounted for in current prices.
Following a brief lull in January, individual investors are re-engaging with the cryptocurrency arena amidst a recent surge in prominent digital assets such as BTC and Ethereum, according to JPMorgan Chase & Co analysts.
Analysis reveals a notable increase in Bitcoin outflows from smaller wallets, often associated with retail traders, surpassing inflows from institutional investors. This trend persists even with new spot Bitcoin exchange-traded funds (ETFs), as Mr. Nikolaos Panigirtzoglou and his team highlighted.
With BTC poised for its sixth consecutive month of gains, investors eagerly await significant developments within the cryptocurrency sector. The strategists at JPMorgan penned:
“The revival of the retail impulse in February perhaps reflects the anticipation of three main crypto catalysts over the coming months: the Bitcoin halving event, the next major upgrade of the Ethereum network and the prospect of approval of spot Ethereum ETFs by the Securities and Exchange Commission in May. We believe that the first two catalysts are largely priced in, while for the third catalyst, we see only a 50 per cent chance.”
Bitcoin’s Ongoing Rally Shows Signs Of Tapering Off
However, the ongoing rally in BTC prices shows signs of tapering off, hinting at a potential downturn as BTC braces for its first weekly losses in over a month. Over the past week, Bitcoin prices have trended 1.20% into negative territory, struggling to maintain a position above $51,000. If this trend persists, it would mark Bitcoin’s first negative week since the inception of its recent rally in late January.
Despite the imminent arrival of the April halving event, a customary occurrence known for its reduction in the supply of Bitcoin and consequent stimulation of price momentum, certain market analysts are issuing warnings regarding the potential limitations on upward movement in the cryptocurrency’s value as the event approaches.
Presently, demand for Bitcoin ETFs significantly outstrips BTC supply by a factor of 13x. This divergence is expected to widen further with the halving event on the horizon. Certain market analysts anticipate BTC prices to surge to $273,000 post-halving.
However, amidst the optimism, concerns linger regarding potential downside risks. The author of the stock-to-flow model, PlanB, asserts that a BTC price plunge below $40,000 seems improbable. Nonetheless, a correction of up to 20% from current levels is not ruled out.