JPMorgan: Bitcoin trades about 12% above its estimated fair value

The fair value of Bitcoin sits at around $38 000, according to JPMorgan strategists led by Nikolaos Panigirtzoglou. Bloomberg reports this.

Analysts assumed that the cryptocurrency’s volatility is roughly four times that of gold. In a scenario where the volatility ratio of assets declines to three times, the fair value of Bitcoin would rise to $50 000, they noted.

As of writing, digital gold is trading near $43 400 (CoinGecko), about 12% above the level indicated by JPMorgan strategists.

\”The biggest obstacle to Bitcoin’s momentum is its volatility and the boom-and-bust cycles that hinder further institutional adoption,\” the experts noted.

The long-term target for Bitcoin’s price is $150 000. Analysts calculate it as the level at which Bitcoin’s market capitalization would equal the value of private investments in gold. In January 2021 they named similar figures — $146 000.

The strategists also stated that the January price correction, being smaller than the May one, resembled capitulation. Bitcoin then fell 50%.

However indicators such as open interest in futures and exchange reserves currently point to a prolonged and, therefore, more worrying trend of shrinking positions, which began in November, they stressed.

According to a survey, more than 40% of JPMorgan clients expect Bitcoin to reach $60 000 by the end of 2022, and only 5% believe the price will reach $100 000.