JPMorgan noted the fall in cost of bitcoin production could act as boosting bearish trend.
Global crypto market has seen trembling situations since the start of this year. This is due to major cryptocurrencies like bitcoin and other digital assets starting struggling to keep the pace, after hitting their all time high during last year. After a long beleaguered phase, cryptocurrencies have hardly started to show slight upward movements, but another concern came in the form of fall in bitcoin production cost.
Due to several reasons like crumbling macroeconomic situations all around the world because of inflation, then interest rates hike of FED to reduce inflation and doubt of crypto regulations or bans, made the cryptocurrencies struggling throughout this time. Now another reason for bitcoin investors to worry about is that the cost of bitcoin production dropped from $20,000 to $13,000, by the start of June month.
Major investment bank – JPMorgan Chase – said that this instance could turn out to be bad and can make harsh impacts on the border crypto market. JPM even said that this phenomenon could act as a catalyst to further enhance the ongoing bearish trends in the market.
While detailing the potential reasons behind the drop in bitcoin production cost, a group of strategists from JPMorgan outlined the recent decline in use of electricity is responsible for this instance. Cambridge Bitcoin Electricity Consumption Index brought this information about drop in electricity usage.
On top of that, the hash rate of bitcoin has also experienced fluctuations for several past weeks. However, there was no sign of the hash rate going downwards or showing a downtrend. However, this drop in production cost of bitcoin could drastically affect the trading price of bitcoin (BTC). Moreover it could also result in creating fear in investors’ minds of trading bitcoin (BTC) further.
Such instances provoking prices to go down, seems to be a luring opportunity to investors wishing to grab bitcoin. However, financial experts and economists suggest keeping distance from digital assets during such riskier times. Investors with bigger risk appetite or with big bags full of money, considered this as an opportunity and went on to add a significant amount of the crypto asset.
Source: https://www.thecoinrepublic.com/2022/07/18/significant-drop-in-bitcoin-production-cost-call-for-another-bearish-trend/