Shock JPMorgan price prediction reveals ‘catastrophic’ doomsday scenario could be just the beginning for Bitcoin and Ethereum
Bitcoinbitcoin, ethereumetherium and other cryptocurrencies have been thrust back into the limelight this year and are now in a “pivotal moment.”
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Bitcoin’s price increased by about 70% in the first three months of the year, making it one of the best-performing assets even as US Senator Elizabeth Warren begins building an “anti-crypto army.”
Now, as the US banking crisis begins to subside, JPMorgan analysts have said the banking chaos vindicated many bitcoin, ethereum and crypto believers – and issued a bullish bitcoin price prediction.
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“For crypto supporters, the US banking crisis exposed the weaknesses of the traditional financial system given that banks’ maturity mismatches are susceptible to bank runs,” JPMorgan strategists led by Nikolaos Panigirtzoglou wrote in a note seen by Barron’s.
“Crypto proponents have long argued that the crypto ecosystem is superior, not least because deposits are held in entities such as stablecoins which, as a digital form of money market funds, are 100% secured by high-quality liquid assets and thus less prone to runs.”
The JPMorgan analysts’ bitcoin bullishness is at odds with the bank’s CEO Jamie Dimon, who called crypto a “decentralized Ponzi scheme” in September — even as the bank makes its own crypto moves.
Bitcoin is now just over a year away from its next supply cut, known as a halving, which will increase bitcoin’s production costs and potentially increase its price. The next bitcoin halving, its fourth, is tentatively scheduled for the end of April 2024 and will see the bitcoin block reward issued to miners who maintain the network fall from 6.25 bitcoin to 3.125 bitcoin.
“This would mechanically double bitcoin’s production cost to about $40,000, creating a positive psychological effect,” Panigirtzoglou said. “This is because bitcoin’s production cost has historically acted as an effective lower bound.”
Panigirtzoglou also predicts that the sudden growth of bitcoin-based non-fungible tokens (NFTs) called ordinals this year could provide another price support as they boost bitcoin miner earnings.
“This is because metadata such as text, images can be written onto the bitcoin network itself, without relying on smart contracts as seen with other blockchains, where NFTs are created through smart contracts,” Panigirtzoglou said.
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The growing popularity of bitcoin ordinals has improved sentiment for the broader NFT and crypto market.
“The recent movement in bitcoin is also positive for the NFT market, as all boats rise with the tide,” said John Stefanidis, CEO of NFT-based gaming platform Balthazar, alongside an NFT market report. “It is likely to have a positive impact on the overall sentiment of the market. Bitcoin is currently trading above US$28,000, something we have not seen since June of last year.”
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