Two of the largest US banks are urging crypto investors to remain cautious about the upcoming Bitcoin halving, which analysts say may not play out like previous cycles.
In a report released Wednesday, JPMorgan predicted that the price of Bitcoin would not rise after the event and was more likely to resume the declines that began earlier this month.
Could Halving Be Bearish for Bitcoin?
The bank's outlook remains consistent with its relatively bearish guidance throughout the year, refusing to be swayed by growing optimism around Bitcoin spot ETFs or the halving.
“We do not expect the price of bitcoin to increase after the halving, as it has already been priced in,” wrote analysts led by Nikolaos Panigirtzoglou. “In fact, we see a decline in the price of Bitcoin after the halving for several reasons.”
The analyst used the price of gold as a reference point, as the two assets share a similar investment thesis as a risk-free store of value and inflation hedge. On a volatility-adjusted basis, the bank argued that Bitcoin's price should only be $45,000, meaning its current market price ($63,700) is significantly overbought.
Supporting their case is a persistent long bias in Bitcoin futures open interest and a lack of venture funding in the crypto industry this year.
“The technical situation for Bitcoin is rather worrying, as we did not see any rebound after the price decline on Friday and Saturday,” added Alex Kuptsikevich, senior market analyst at FxPro, in an email to Forbes. “On the contrary, the market seems to be getting used to current prices in anticipation of a halving.”
Goldman’s Bitcoin Outlook
In a note to clients last week, Goldman Sachs acknowledged that Bitcoin's last three halving cycles led to a massive price rally afterward – although the exact time it took to reach a new high history thereafter was considerably different.
This cycle looks even more different: Bitcoin has already surpassed its previous cycle's all-time high, above $69,000 in March, a month before the halving even happened.
“One should be careful about extrapolating past cycles and the impact of a halving, given the respective macroeconomic conditions,” the analysts said.
The halving itself is expected later this week, expected on April 20 at 01:44 UTC. Whether or not this results in a “buy the rumor, sell the news” event in the near term, Goldman believes that immediate BTC price action is hardly relevant.
“Bitcoin price performance will likely continue to be driven by said supply-demand dynamics and continued demand for Bitcoin ETFs, which, combined with the self-reflexive nature of crypto markets, is the primary determinant of spot price action,” the bank said.
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