Odaily Planet Daily reported that Nikolaos Panigirtzoglou, Managing Director at JPMorgan, and his team pointed out in a report on Wednesday that the recent pressure on Bitcoin prices primarily stems from two major factors: first, the recent decline in Bitcoin network computing power and mining difficulty, and second, the latest developments surrounding Strategy.
Analysts indicate that the decline in computing power and mining difficulty reflects the influence of two forces: China reaffirming its ban on Bitcoin mining after a surge in private mining activities, and the drop in Bitcoin prices alongside high energy costs squeezing profits, leading to the exit of high-cost miners outside of China.
Although a decrease in hashrate usually increases miners' income, analysts state that 'the price of Bitcoin continues to linger below its production cost,' leading to selling pressure on this first and largest cryptocurrency.
JPMorgan analysts have currently lowered their estimate of the production cost of Bitcoin to $90,000, down from $94,000 last month. According to analysts, this update is based on an electricity price assumption of $0.05 per kilowatt-hour, and for high-cost producers, every increase of $0.01 per kilowatt-hour will raise their production cost by $18,000.
JPMorgan's report states: 'Due to rising electricity costs and falling Bitcoin prices squeezing profits, some high-cost miners have been forced to sell Bitcoin in recent weeks.'
Even so, analysts say that miners are not the main driver of Bitcoin's next move. Instead, they believe that Strategy's balance sheet and its ability to avoid selling Bitcoin are key.
