According to a research report by JPMorgan, bitcoin and gold have both experienced a surge in value as they are considered safe havens in the event of a catastrophic situation. Despite facing regulatory challenges, the cryptocurrency market has performed well over the past month, with bitcoin outpacing other cryptocurrencies. The report highlights that bitcoin, which has the largest market capitalization among cryptocurrencies, rose alongside gold due to their perceived hedging potential in the face of a potential crisis.
According to a report led by Nikolaos Panigirtzoglou, recent issues in the banking industry have exposed the flaws of the traditional financial system. The analysts note that banks' mismatched maturity levels make them vulnerable to bank runs. As a result, some proponents of cryptocurrency view the U.S. banking crisis and the subsequent shift of U.S. bank deposits to U.S. money market funds as validation of the crypto ecosystem.
In addition, the report highlights the launch of Bitcoin Ordinals two months ago, which is expected to boost transaction fees and revenue for miners. This development is seen as another factor driving up the value of bitcoin.
JPMorgan's research report notes that the primary driver of support for bitcoin has been the increasing attention from investors on the upcoming halving event, scheduled for April 2024. During this event, the mining rewards for bitcoin will be reduced by half, effectively doubling its production cost to approximately $40,000.
The report suggests that this increase in production cost will have a positive psychological impact on the price of bitcoin, as historically, the production cost has acted as a reliable lower boundary for the cryptocurrency's value. Overall, JPMorgan views the halving event as a significant factor that will continue to support bitcoin's price.