JPMorgan Says Bitcoin Production Cost Drops 50% to $13,000, Why This Is Negative for BTC?

Wall Street banking JPMorgan has lately revealed a report that implies that the Bitcoin manufacturing value has dropped 50% during the last month. Currently, the BTC manufacturing value stands at $13,000 down from the $24,000 value in the beginning of June 2022.

JPMorgan strategists led by Nikolaos Panigirtzoglou wrote that this drop comes amid the autumn in electrical energy use as per information from Cambridge Bitcoin Electricity Consumption Index.

The banking large notes that that is an effort y the miners to defend profitability and deploy environment friendly rigs. However, it may additionally function a serious impediment to any beneficial properties within the Bitcoin value. The JPMorgan strategists wrote:

“While clearly helping miners’ profitability and potentially reducing pressures on miners to sell Bitcoin holdings to raise liquidity or for deleveraging, the decline in the production cost might be perceived as negative for the Bitcoin price outlook going forward. The production cost is perceived by some market participants as the lower bound of the Bitcoin’s price range in a bear market.”

Bitcoin Miner Capitulation

During the second quarter of 2022, Bitcoin miners had been on a selling spree. As the Bitcoin value corrected a staggering 70% from its all-time highs in November 2021, miners had to offload extra amount so as to cowl their operational prices.

Last month, JPMorgan strategists mentioned that Bitcoin may additional witness promoting strain in the course of the third quarter as effectively. Miners are additional possible to liquidate their holdings going forward. Also, if the BTC manufacturing has truly gone to $13,000 as per JPMorgan, miners might need a great revenue to make on its new manufacturing.

On-chain information supplier Glassnode lately shared its insights whereby it notes that long-term holder (LTH) capitulation. The report provides:

“There is an increased probability that a long-term holder (LTH) capitulation is underway. Bitcoin investors are not out of the woods yet”.

On the upside, Bitcoin (BTC) nonetheless has to cross its 200-day EMA at round $22,500 and maintain above that stage to resume the uptrend.

Bhushan is a FinTech fanatic and holds a great aptitude in understanding monetary markets. His curiosity in economics and finance draw his consideration in direction of the brand new rising Blockchain Technology and Cryptocurrency markets. He is constantly in a studying course of and retains himself motivated by sharing his acquired data. In free time he reads thriller fictions novels and generally discover his culinary abilities.

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