According to a research report published by JPMorgan, one of the top financial organizations in the world, retail demand for Bitcoin (BTC) is expected to increase over the course of the upcoming year. The study emphasizes the excitement surrounding the next halving event for the biggest cryptocurrency in the world, which is anticipated to take place in April 2024.
The recent introduction of Bitcoin Ordinals and BRC-20 tokens, as well as the halving event, have all increased interest in Bitcoin among retail investors, said JPMorgan analysts. This trend is likely to continue as the halves event approaches because in the past, halving events have been followed by a bullish trajectory in Bitcoin prices.
Bitcoin halving, which occurs when mining incentives are reduced by 50%, “would mechanically double bitcoin production cost to around $40,000, creating a positive psychological effect,” analysts lead by Nikolaos Panigirtzoglou stated. According to JPMorgan’s researchers, this doubling of production costs has a positive psychological impact on investors, which in turn increases demand for Bitcoin from consumers. They point out that historically, the production cost has served as a support and an upward force for the price of Bitcoin.
The JPMorgan analysis highlights the fact that favorable price trajectories for Bitcoin were present in conjunction with the previous halving events in 2016 and 2020. Bitcoin’s price increased more quickly after each halving, indicating a favorable relationship between halving occurrences and market confidence. This historical precedent gives JPMorgan’s estimate of increased retail demand before to April 2024 halving additional credence.
While retail demand for Bitcoin is expected to surge, the report highlights a contrasting trend in institutional demand. JPMorgan notes that institutional investors have shown a decline in interest due to concerns over fraud, heightened volatility, and the regulatory environment. The report suggests that the recent U.S. regulatory actions have increased uncertainty, discouraging institutional investors from entering the Bitcoin market. Instead, retail investors, seeking alternative investments and attracted by the potential for significant gains, have been more active in acquiring Bitcoin.
Prior to the impending halving event in April 2024, JPMorgan’s research paper stresses the growing strength of retail demand for Bitcoin. The fact that Bitcoin’s production costs have doubled and that price increases have previously occurred after price-halving events support the optimistic outlook. Retail investors are utilizing Bitcoin’s potential as an investment opportunity and a hedge, despite a fall in institutional demand. It will be interesting to see how retail demand affects the future of Bitcoin and its price trajectory as the cryptocurrency sector develops further.