Bitcoin is due to undergo its hotly anticipated halving event in just over 24 hours as of this writing, slashing the rewards provided to Bitcoin miners in half and slowing the creation of new coins.
Constraining supply sounds like a move that would spur a bullish market, but America’s biggest bank says it’s not so simple. In a Thursday note cited by Bloomberg, JP Morgan analysts said that the oldest and largest digital asset has already been overbought.
“We do not expect Bitcoin price increases post-halving as it has already been priced in,” they concluded, according to Bloomberg.
The financial giant added that a lack of venture capital funding in the crypto space will also contribute to a lower BTC value.
The halving is an event baked into Bitcoin’s code. While based on the steady progress of extending the blockchain, it essentially occurs every four years.
Miners—large operations that process transactions on the network—are rewarded with Bitcoin for minting new coins. On Saturday, their rewards will drop from 6.25 BTC to 3.125 BTC for each block they process.
This means miners will have to work more efficiently to remain profitable. The JP Morgan report says larger players can weather the change.
“Publicly-listed Bitcoin miners are well positioned to take advantage of the new environment, mainly due to greater access to funding and in particular equity financing,” the report said. “This helps them to scale their operations and invest into more efficient equipment.”
It also means fewer Bitcoin will be available on the market—which some industry observers believe will raise the asset’s long-term price.
Others, including JP Morgan analysts led by Nikolaos Panigirtzoglou, say that the market has already absorbed the potential impact of the halving.
Bitcoin’s price plunged hard last Friday and continued to drop this week after a combination of massive liquidations in the futures market, war in the Middle East, and commentary from Federal Reserve Chair Jerome Powell led to a sell-off.
The price of Bitcoin is now at $63,476, a 9% seven-day drop, CoinGecko data shows. Last month, it hit a new all-time high of $73,737 per coin.
Experts in the space told Decrypt that volatility and even big price dips ahead of the halving are not only expected—it has happened each time.
Edited by Ryan Ozawa.