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Bitcoin's 2024 Halving Set to Surge Production Costs, Injecting Investor Confidence: JPMorgan Report

Continued enthusiasm for Bitcoin (CRYPTO: BTC) from individual investors is expected to persist over the upcoming year, leading up to the cryptocurrency's next halving event, according to a recent research paper published by JPMorgan Chase & Co (NYSE: JPM).

The research report credits the recent surge in retail interest in part to the emergence of Bitcoin Ordinals and BRC-20 tokens, Coindesk reported.

But the key element driving future retail investor demand for Bitcoin, the report suggests, is the anticipation building up to the halving event slated for April 2024.

The halving process, a scheduled event where Bitcoin mining rewards are slashed by half, "would technically push Bitcoin's production cost up to around $40,000, instilling a sense of positivity among investors," the research team, led by Nikolaos Panigirtzoglou, explained.

This optimism is rooted in the observation that the production cost has traditionally served as an effective price floor for digital currency.

Further supporting this outlook are patterns observed around past halving events in 2016 and 2020, which the banking giant pointed out were "followed by an upward price movement for Bitcoin" that gained momentum post-event.

However, while retail demand shows signs of strengthening, institutional interest in Bitcoin seems to be on a downward slope.

The research paper notes that institutional investors appear to be deterred by factors such as fraud allegations, increased volatility, and a notable uptick in U.S. regulatory scrutiny throughout the year, leading to a cloud of uncertainty.

In a previous commentary, JPMorgan suggested that both gold and Bitcoin saw significant rallies in the aftermath of Silicon Valley Bank's collapse.

The bank posited that investors considered these asset classes as "safe havens in the face of a catastrophic scenario," with institutional investors gravitating towards gold and retail investors favoring Bitcoin.

© 2023 Benzinga does not provide investment advice. All rights reserved.

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