Recent increase in retail demand can be partly attributed to the advent of Bitcoin and BRC-20 tokens, JPMorgan (JPM) said in a research report Thursday. The world’s largest cryptocurrency is set to experience a halving event in April 2024, which would mechanically double bitcoin production cost to around $40,000, creating a positive psychological effect, according to the report.
Previous halving events in 2016 and 2020 were accompanied by a bullish trajectory for bitcoin prices that accelerated after they occurred, the bank noted. However, institutional demand for bitcoin has been falling due to fraud, heightened volatility, and a year-to-date U.S. regulatory assault that has led to increased uncertainty.
JPMorgan previously argued that gold and bitcoin both rallied strongly following the collapse of Silicon Valley Bank as investors regarded these asset classes as hedges to a catastrophic scenario, with institutional investors buying gold and retail buying bitcoin. This suggests that retail demand for bitcoin is likely to remain strong over the coming year ahead of the next halving event.