JPMorgan analysts noted that the most critical element in Bitcoin's near-term price direction is not selling pressure from miners, but the financial resilience of Strategy, the world's largest institutional Bitcoin holder.
The team, led by managing director Nikolaos Panigirtzoglou, stated in a report published on Wednesday that the Bitcoin price has been facing two main pressures recently: the decline in network hash rate and mining difficulty, and the uncertainty surrounding the Strategy.
Mining Pressure and Production Costs
According to analysts, the decline in hash rate is due to China's re-emphasizing of its ban on private mining activities and miners curtailing their activities due to falling profitability due to high energy costs.
While production costs have fallen, the price of Bitcoin is still below that cost, forcing some high-cost miners to sell, putting pressure on the market. JPMorgan calculated the cost of Bitcoin production at $90,000, a decrease from the previous month.
Strategy's Financial Resilience as a Key Factor
However, analysts emphasize that selling pressure from miners is not the primary driver of Bitcoin's direction. The crucial factor is whether Strategy can meet its financial obligations without needing to sell Bitcoin. The metric, which measures the company's debt, dividends, and capital structure relative to its Bitcoin holdings, currently stands at 1.13, indicating that the company is not under selling pressure.
Strategy's recently announced $1.44 billion in USD reserves is sufficient to easily cover dividend and interest payments for the next two years. This further reduces potential pressure for Bitcoin selling. Despite the company's slowing Bitcoin accumulation rate, its total holdings exceed 650,000 BTC.
MSCI Index Decision and Long-Term Outlook
MSCI's index decision, scheduled for January 15th, is also being closely watched. According to JPMorgan, a potential delisting decision has been largely priced in by the markets. However, the Strategy's continued presence in the indexes could spark a strong recovery in both stock and Bitcoin prices.
On the other hand, analysts state that in the long-term outlook, Bitcoin has a strong potential for value appreciation comparable to gold.