According to a recent research report from JPMorgan, the demand for Bitcoin (BTC) in the retail sector is expected to continue to thrive in the upcoming year, leading up to the next halving event for the world’s most prominent cryptocurrency. The report suggests that retail investors will maintain a strong interest in Bitcoin, including a positive outlook for its future.
As per the report, the rise in retail demand for Bitcoin can be partially attributed to the introduction of Bitcoin Ordinals and Ethereum-based “BRC-20 Tokens”. Meanwhile, the average transaction fee for Bitcoin has experienced a significant surge, reaching a level that is nearly five times higher than its previous mark. Recently, it reached a two-year peak, reaching a substantial $31.14.
However, what’s even more significant is the expectation that retail investors’ interest in Bitcoin will grow stronger as we approach the halving event scheduled for April 2024.
Analysts, headed by Nikolaos Panigirtzoglou, have expressed that the Bitcoin halving, which involves a reduction of mining rewards by 50%, would result in a doubling of the production cost of Bitcoin to approximately $40,000. This change in cost is expected to generate a positive psychological impact within the market.
The report highlights that the production cost has historically served as a strong lower limit for the price of the cryptocurrency. This observation is significant in understanding the potential impact of the upcoming halving event.
In the past both, the 2016 and 2020 halving were followed by a bullish trend in bitcoin prices, which gained momentum after the event took place. The bank’s analysis underscores the correction between halving events and positive price momentum for Bitcoin.
Conversely, institutional demand for bitcoin has been experiencing a decline, as investors have been deterred by concerns related to fraud, heightened volatility, and an ongoing regulatory crackdown in the United States throughout the year. These factors have contributed to an atmosphere of increased uncertainty, which has dampened institutional interest in cryptocurrency.
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