Retail Investors Driving Bitcoin Demand Ahead of Halving

In the upcoming year leading up to the subsequent halving event, retail demand for Bitcoin (BTC) is anticipated to continue high, according to a recent research analysis by JPMorgan. The paper underlines the effect of BRC-20 tokens and Bitcoin Ordinals on retail demand, but more significantly, it underscores how the impending halving event in April 2024 will further boost investor interest in Bitcoin.

What Does It Mean to Halve?

The mining rewards for bitcoin are halved or cut in half. According to the article, this event will increase Bitcoin’s production cost by almost $40,000, which will have a good psychological impact. The production cost has historically acted as a price floor, playing a critical role in determining market mood.

Positive Direction

According to the JPMorgan analysis, the price of Bitcoin rose after the previous halving occurrences in 2016 and 2020. Following these occurrences, the price of Bitcoin significantly increased, indicating a favorable market reaction. This historical trend heightens interest in the impending halving event in 2024.

Challenges with Institutional Demand

Retail demand for Bitcoin is anticipated to increase, although institutional demand has had some difficulties. Institutional interest has decreased as a result of factors like fraud, increased volatility, and continued regulatory concerns in the United States. However, according to JPMorgan’s analysis, institutional investors may use Bitcoin as a hedge against catastrophic events, much to how gold experienced a surge after Silicon Valley Bank’s demise.

According to JPMorgan’s research analysis, factors like the impending halving event and the favorable psychological impact it produces will likely keep driving retail demand for Bitcoin strong in the foreseeable future. The potential for Bitcoin to operate as a hedge in uncertain times may entice institutional investors, even though there are some barriers to institutional demand. Understanding Bitcoin’s future course will require keeping a close eye on retail and institutional demand dynamics as the market develops.