Bitcoin’s near-term price is less about miners and more about the financial resilience of Strategy, according to JPMorgan analysts. The firm’s ability to hold onto its Bitcoin outweighs declines in hash rate or mining difficulty, making its balance sheet the market’s focal point.
Analysts led by managing director Nikolaos Panigirtzoglou flagged two pressure points in a Wednesday report: a recent drop in Bitcoin network hash rate and mining difficulty, and growing attention on Strategy’s treasury.
Hash rate and difficulty slid after China reiterated its mining ban and high-cost miners outside the country retreated as energy costs and low prices squeezed margins. Bitcoin currently trades below production costs, creating potential sell pressure.
JPMorgan now estimates production cost at $90,000 per Bitcoin, down from $94,000 last month. Each $0.01 increase in electricity costs pushes production up by $18,000 for higher-cost miners.
High-cost miners have faced forced sales recently, but Strategy looks solid. Its enterprise-value-to-Bitcoin-holdings ratio stands at 1.13, signaling it is unlikely to sell Bitcoin to cover dividends or interest obligations. Analysts say markets will feel reassured if the ratio stays above 1.0.
Strategy also built a $1.44 billion U.S. dollar reserve, enough to cover two years of dividend and interest payments. That cushion reduces the risk of forced Bitcoin sales and stabilizes the cryptocurrency’s outlook.
The company has slowed Bitcoin accumulation but continues to grow its treasury, now surpassing 650,000 Bitcoin. Investors are watching MSCI closely to see if Strategy and other digital asset treasury companies will be removed from equity indices. JPMorgan notes the impact would likely be asymmetric.
MSCI exclusion risk appears priced in. Strategy’s stock has fallen 40% since Oct. 10, underperforming Bitcoin by roughly 20%, or $18 billion in market value. If Strategy stays in the indices, both its stock and Bitcoin could rebound sharply toward pre-October levels.
Looking further out, JPMorgan sees significant upside. Their volatility-adjusted comparison of Bitcoin to gold implies a theoretical price near $170,000, suggesting major potential appreciation over six to 12 months if market conditions stabilize. Bitcoin currently trades around $91,340.
