J.P. Morgan: 'Bitcoin's short-term direction will change depending on MicroStrategy's situation'

J.P. Morgan said that, in short-term Bitcoin (BTC) price movements, MicroStrategy's financial health and Bitcoin holding strategy are a larger variable than miners' selling pressure.

Nikolaos Panigirtzoglou, J.P. Morgan managing director, said in a report on the 4th (local time) that the recent weakness in Bitcoin is due to declines in the Bitcoin network's hash rate and difficulty and uncertainty related to MicroStrategy.

According to the report, the recent hash rate decline is the combined result of China's emphasis on mining bans and foreign high-cost miners reducing operations as profitability worsened due to price drops and rising power costs.

When the hash rate falls, miners' profitability generally improves. But J.P. Morgan explained that Bitcoin's price is still trading below production cost, prompting miners' selling pressure. J.P. Morgan currently estimates Bitcoin's production cost at $90,000 per coin, down from last month's estimate of $94,000.

J.P. Morgan explained, "As rising power costs and price declines squeeze profits, some high-cost miners have recently sold their held Bitcoins."

Nevertheless, J.P. Morgan emphasized that MicroStrategy's actions have a greater impact on the market than miners' selling. MicroStrategy is the publicly listed company holding the most Bitcoins in the world and has never sold any of its holdings.

J.P. Morgan said, "Bitcoin's next direction depends not on miners but on MicroStrategy's financial capacity and holding strategy," and assessed that "unless MicroStrategy sells Bitcoin, the shock to the market will be limited."