The focus was also on the halving event, which appeared imminent, and what its effects would be on the long-term supply of Bitcoin.
Bitcoin fell 0.3% to $62,694.3 in the past 24 hours by 07:22 ET (11:22 GMT).
Focus was now squarely on the halving event, which is set to take place with the generation of block no. 840,000 on the Bitcoin blockchain. Less than 300 blocks were left to reach the block, with the halving set to take place by April 20.
The event will reduce the pace at which new Bitcoin is mined by effectively halving rewards for miners.
The halving furthers the narrative that Bitcoin’s scarcity will help buoy the token’s prices.
But while the token has appreciated sharply over the past 12 years, there appeared to be few direct links between the past three halving events and immediate price gains in Bitcoin.
External factors- such as interest rates and risk appetite- appeared to have played a bigger role in Bitcoin’s price trajectory, especially given its tendency to track U.S. technology stocks.
While a bulk of Bitcoin’s gains this year were driven by the U.S. approval of spot exchange-traded funds, this momentum now appeared to be running low.
The token, along with the broader crypto space- has thrived chiefly in low-interest rate, high-liquidity environments- a scenario that is likely to materialize later, rather than earlier in 2024.
According to JPMorgan, it is more likely that BTC will witness downward pressure following the halving event.
The bank predicts a downturn mainly due to the market’s current overbought conditions, evidenced by their analysis of open interest in bitcoin futures.
Moreover, the current cryptocurrency price exceeds JPMorgan’s volatility-adjusted comparison with gold, which they place at $45,000, as well as the projected production cost of $42,000 post-halving. Historically, the production cost of bitcoin has served as a lower boundary for its prices.
Also, the Wall Street titan pointed out that venture capital funding for the crypto sector remains low, despite a recent revival in the market. The firm believes that mining companies will experience the most significant impact from the halving.
“As unprofitable bitcoin miners exit the bitcoin network, we anticipate a significant drop in the hashrate and consolidation among bitcoin miners with a highest share for publicly-listed bitcoin miners,” analysts said.
“Post halving event, it is also likely that some bitcoin mining firms may look to diversify into low energy cost regions such as Latin America or Africa to deploy their inefficient mining rigs to gain salvage values from those rigs which would otherwise sit idle,” they added.
Broader cryptocurrency prices saw sustained losses as traders further dialed back expectations for a June interest rate cut by the Federal Reserve. This came in the wake of strong inflation data and hawkish signals from Fed officials.
Crypto prices took little advantage of a mild pullback in the dollar, as traders locked-in profits at 5-1/2-month highs in the greenback.
No. 2 crypto Ethereum fell 0.8% to $3,048.50, while Solana fell 1.6% and XRP gained 0.9%.
Gains in the crypto space this year have been biased largely towards Bitcoin, after the approval of the spot ETFs. Bitcoin accounts for over 55% of overall value in the crypto market.
Source: Cryptocurrency - investing.com
