JPMorgan analysis: Still bullish on Bitcoin to $170,000

Author: Felix, PANews

A research report released on December 4th by a team of analysts at JPMorgan Chase (led by Senior Strategist Nikolaos Panigirtzoglou) points out that while declining Bitcoin hashrate and rising mining costs have exacerbated downward pressure on Bitcoin, the movements of Strategy (formerly MicroStrategy, stock code MSTR) are crucial to Bitcoin's near-term outlook.

Analysts stated that the recent decline in Bitcoin hashrate and mining difficulty has put downward pressure on Bitcoin prices. This decline can be attributed to the People's Bank of China reiterating its ban on Bitcoin mining and trading, as well as the exit of high-cost miners due to rising electricity prices and falling Bitcoin prices, leading to decreased profitability and forcing some miners to sell their Bitcoin.

Bitcoin mining costs have fallen from $94,000 last month to $90,000.

Despite this, Bitcoin's price remains below this mining cost, leading to further selling pressure. Analysts say that assuming an electricity price of $0.05 per kilowatt-hour, a $0.01/kilowatt-hour increase in electricity price would add $18,000 to the mining costs for high-cost miners. Even so, JPMorgan Chase believes that miners are not the key to Bitcoin's next move; Strategy's holding size and stability are more decisive. The report emphasizes that whether Strategy can maintain its enterprise value to Bitcoin holdings ratio (mNAV) above 1 and avoid selling off Bitcoin is the key driver of Bitcoin's recent price movement. Currently, the ratio is approximately 1.13. As long as it remains above 1.0, Strategy will not need to use its approximately 650,000 Bitcoins to pay convertible bond interest or preferred stock dividends. The company's $1.44 billion cash reserves are also sufficient to cover all cash obligations for the next two years, which will significantly alleviate market panic. If the ratio remains above 1.0 and Strategy ultimately avoids selling Bitcoin, market confidence is likely to recover quickly, and the worst period for Bitcoin prices will be over. However, if the ratio falls below 1.0, or if the MSCI index adjustment on January 15, 2026 triggers a large-scale sell-off of Strategy stock by passive funds, forcing the company to liquidate Bitcoin, it will trigger a new vicious cycle. The risk of Strategy being removed from MSCI has been “priced in.” While the market is currently closely watching whether MSCI will remove Strategy and other digital asset management (DAT) companies from its stock indices, JPMorgan Chase says the downside risk from such a decision is limited because it has been “fully priced in by the market.” Since MSCI first announced discussions on October 10, Strategy’s stock price has fallen by about 40%. Analysts believe this decline indicates that the market has already factored in the risk of being removed from MSCI, and may even have already considered the risk of being removed from all major stock indices. Last month, analysts estimated that if MSCI removed Strategy, it would result in a $2.8 billion outflow; if all other stock indices followed suit, it would result in a $8.8 billion outflow. At the time, Strategy's co-founder and executive chairman, Michael Saylor, stated, "Index classification doesn't define us. Our strategy is long-term, and our belief in Bitcoin remains unwavering." Despite this, analysts say MSCI's decision on January 15th remains crucial for the trajectory of Strategy and Bitcoin. Removal could only bring limited downward pressure. If MSCI retains Strategy in its index, both Strategy and Bitcoin "could rebound strongly," returning to pre-October 10th levels. JPMorgan Chase also points out that Bitcoin's mining costs have historically acted as a support level. If Bitcoin's price remains below its mining costs for an extended period, miners could face greater pressure, potentially leading to further declines in mining costs. However, JPMorgan Chase maintains its long-term optimistic outlook on Bitcoin, theoretically placing its price close to $170,000. This means that if market conditions stabilize, Bitcoin could appreciate significantly over the next 6 to 12 months.