Analysts from the investment powerhouse JPMorgan have pinpointed a vital element that will influence the near-term price trajectory of Bitcoin. In a recent report, they emphasized that the primary concern is not the selling pressure from miners but rather the financial stability of Strategy, the world”s largest institutional holder of Bitcoin.
The report, led by managing director Nikolaos Panigirtzoglou, highlights two key pressures currently affecting Bitcoin”s price: a decrease in network hash rate and mining difficulty, alongside uncertainties related to Strategy”s financial obligations. The decline in hash rate has been attributed to China”s renewed enforcement of its ban on private mining operations, coupled with miners reducing their activities due to diminished profitability stemming from high energy costs.
JPMorgan has assessed the cost of Bitcoin production to be around $90,000, a drop from the previous month. However, the analysts are quick to note that the selling pressure from miners is not the primary factor driving Bitcoin”s price. Instead, they argue that the critical aspect to watch is whether Strategy can fulfill its financial commitments without resorting to selling its Bitcoin holdings.
Currently, the financial metric reflecting Strategy”s debt, dividends, and capital structure in relation to its Bitcoin assets stands at 1.13. This indicates that the company is not under immediate selling pressure. Furthermore, Strategy”s recently disclosed USD reserves of $1.44 billion are sufficient to cover dividend and interest payments for the next two years, further alleviating potential selling pressure on Bitcoin.
Despite a slowdown in its Bitcoin accumulation rate, Strategy continues to hold over 650,000 BTC. Additionally, the upcoming MSCI index decision on January 15 is being closely monitored. JPMorgan suggests that any potential delisting has largely been accounted for in the current market pricing. However, if Strategy remains in the index, it could trigger a significant rebound in both stock and Bitcoin prices.
Looking ahead, analysts maintain a long-term optimistic outlook for Bitcoin, suggesting it has strong potential for value appreciation akin to that of gold.
