Bitcoin Halving Price Seen Mostly by JPMorgan, Deutsche Bank

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(Bloomberg) — With just a day or two left, JPMorgan Chase & Co. and Deutsche Bank AG say the once-every-four-years Bitcoin software update known as the “halving” has long been one of the key It is believed. Increasing the value of cryptocurrencies is quite expensive.

JPMorgan analysts wrote in a note Thursday that the main impact will be on Bitcoin mining, rather than the price of the token. As unprofitable miners exit the Bitcoin network, they expect the sector to strengthen, with publicly traded companies best positioned to gain market share.

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“Publicly listed Bitcoin miners are well-positioned to take advantage of the new environment, primarily due to greater access to funding and especially equity financing,” JPMorgan analysts wrote. “This helps them scale up their operations and invest in more efficient equipment.”

Similarly, analysts at Deutsche Bank do not expect Bitcoin prices to rise significantly after the cut. Analysts said, since Bitcoin algorithms have already predicted the halving, the market has already factored in this event.

The incident reduced the so-called mining reward, which is a fixed amount of Bitcoin released from the network to compensate miners for validating their transactions, by half every four years. The amendments are likely to take effect late Friday night, according to data from crypto-mining analytics website mempool.space.

ATH Deutsche Bank analysts wrote that in the past, after Bitcoin halvings, the hashrate – a measure of the industry's total mining capacity – typically fell as some miners were priced out of the market. “Participating in the process of guessing the hash and adding a block to the blockchain becomes less profitable as the reward for mining decreases.”

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According to Deutsche Bank, after Bitcoin's first three halvings, the hashrate dropped by 25%, 11% and 25%.

Despite not expecting huge price swings, Deutsche Bank still expects Bitcoin prices to remain high amid expectations of spot Ethereum ETF approval, central bank rate cuts and regulatory changes.

“In addition, there has been an increase in layer-2 solutions and DeFi activity, which increases the practical utility of the network, and the setup starts to look remarkably favorable for the Bitcoin ecosystem and the broader crypto space,” they wrote.

Currently, the US accounts for 40% of Bitcoin mining. However, both JPMorgan and Deutsche Bank agree that it is likely that some Bitcoin mining companies will diversify into “low energy cost areas” such as Latin America or Africa to locate their inefficient mining supply and capture salvage value from those rigs. Will consider bringing. Which would otherwise remain useless.

-With assistance from Isabelle Lee.

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