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Thursday, February 10, 2022

JPMorgan Scared: Bitcoin Must Be At These Lows!


JPMorgan analysts argue that Bitcoin is overvalued at its current price of $44,000.

Analysts at JPMorgan estimate that Bitcoin's "fair value" is $38,000, which should be roughly 12% lower than its current price of $44,000.

Strategists noted that Bitcoin's volatility is 300% higher than gold.

JPMorgan has set a long-term price target of $150,000 for the asset.

Analysts at JPMorgan Chase estimate the “fair value” for Bitcoin to be $38,000, indicating that the asset is overvalued by about 12%.

JPMorgan shares Bitcoin valuation models

Despite the recent drop from its all-time high above $69,000, some analysts at JPMorgan still consider Bitcoin to be overvalued at its current price of around $44,000. Strategists at the investment banking giant led by Nikolaos Panigirtzoglou reported that the “fair value” of Bitcoin is around $38,000. Nikolaos Panigirtzoglou and his team came to this finding after stating that Bitcoin is about 300% more volatile than gold.

In a research note released Tuesday, analysts claimed that Bitcoin's fair value and volatility are inversely proportional. In other words, according to its metrics, if Bitcoin were less volatile, its fair value price would rise. Analysts have suggested that if the volatility gap relative to Bitcoin's gold drops to 200%, the fair value of the asset would be $50,000.

JPMorgan has been conservative on crypto forecasts

Strategists have argued that Bitcoin's biggest hurdle for the future is its "volatility and boom and bust cycles" and said it has had limited institutional adoption. Panigirtzoglou has set a long-term price target of $150,000 for the number one coin, a slight increase from the $145,000 target it set in January 2021.

JPMorgan has been relatively conservative when it comes to crypto forecasts in recent months. In June 2021, weeks after Bitcoin corrected from April's high of $64,000, Panigirtzoglou called for lows around $26,000 and said the fair value was between $24,000 and $36,000. Bitcoin hit a local low of around $29,000 over the summer before surging to $69,000 in November. He's been fighting to keep the heights ever since.

JPMorgan envisions a relatively frightening scenario for Bitcoin

Several factors have contributed to the decline in several difficult months for the crypto market, including fears over Omicron and a possible Russian war, increased correlation with traditional assets, and the Federal Reserve's planned interest rate hikes for 2022. In its research note, JPMorgan analysts cited futures open interest and reserves on exchanges as evidence that the recent market plunge could bring "a longer-term and therefore more alarming trend of downsizing" than the market saw in May 2021.

While JPMorgan is predicting a relatively frightening scenario for Bitcoin, other analysts have shown more confidence in the asset in recent weeks. Asset management firm ARK Invest, led by Cathie Wood, who believes in Bitcoin, said in a report last month that Bitcoin could reach $1 million by 2030. Analysts noted that Bitcoin has seen a sharp increase in long-term investors and adoption is growing at a rapid rate. The same report reveals that Ethereum could become a $20 trillion network by the end of the decade, pushing the price of ETH to around $180,000.


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