More On: jp morgan
JPMorgan says bitcoin miner sales might keep prices low
Former JPMorgan trader sentenced to prison for currency rigging
JPMorgan reportedly stops paying for junior staff’s Ubers to work amid COVID-19
JPMorgan Chase reportedly tells some staff to return to the office
Feds charge 57 with defrauding COVID-19 relief loan program
JPMorgan Chase & Co. strategists believe the recent Bitcoin sell-off by miners will make it difficult for the asset's price to recover, especially if the trend continues.
- According to JP Morgan, if the present sell-off by miners continues, the price of Bitcoin might fall.
- Mining costs have grown, but the coin's value has plummeted in recent weeks.
- Bitcoin's price has dropped by 69 percent and is now worth less than $20,000.
They stated in a statement posted yesterday that publicly traded Bitcoin miners accounted for 20% of all reported Bitcoin sales in May and June. Given their restricted access to financing markets, private miners are likely to sell at the same or even greater rates.
The big sell-off represents a dramatic departure from the idea of keeping block rewards until market conditions improve. However, because to the reduction in Bitcoin prices and its impact on miners' income, many are now struggling to meet operational costs.
According to the strategists,
Offloading of Bitcoins by miners, in order to meet ongoing costs or to deliver, could continue into Q3 if their profitability fails to improve.
It has already "weighed on prices in May and June, however there is a possibility that this pressure may persist."
JP Morgan experts, however, remind out that all is not lost. One silver lining is that the cost of mining Bitcoin has dropped from roughly $18k - $20k earlier this year to $15k this month. This is due to the recent decrease in hash rate and mining difficulty.
Meanwhile, the cost of manufacturing varies according to miner size. Large miners spend roughly $8,000 to generate one Bitcoin, according to Arcane Crypto. Meanwhile, Securitize Capital estimates that after factoring in administrative costs and interest rates, the cost of production for certain miners might exceed $20,000.
Bitcoin is currently trading at 69 percent of its ATH.
Bitcoin's price has dropped by more than half since the beginning of the year. It's also down 69 percent from its all-time high, hovering in the low 20k level in recent weeks.
Several reasons, including the collapse of Terra's ecosystem and the near-insolvency of crypto enterprises like as Celsius and 3AC, have pushed the crypto markets over the brink. However, the fundamental cause of the reduction has been the Fed's increase in interest rates.
Almost every other industry segment, including non-fungible coins and decentralized finance, has also recorded losses. With the majority of miners also having debt responsibilities, selling their Bitcoin stockpile looks to be the only way to stay afloat.
** Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of USA GAG nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
