JPMorgan trims Bitcoin fair value estimate from $150,000 to $38,000

Persistent high volatility constrains institutional uptake of Bitcoin, JPMorgan notes. In turn, analysts justify lowering the fair value of the first cryptocurrency from $150,000 to $38,000, according to Business Insider.

The 50% pullback from a November high underscores the boom-bust cycle, which presents a hurdle for institutions adding it to their portfolios.

«Our previous forecast that the Bitcoin-to-gold volatility ratio would fall to about two by the end of 2022 seems unrealistic. We are lowering the fair value of the first cryptocurrency on the basis of this ratio to a quarter of $150,000, or $38,000», — according to the report.

The JPMorgan model envisaged Bitcoin volatility converging with gold volatility and aligning their shares in investor portfolios.

The latest wave of selling in the cryptocurrency has raised doubts about its diversification properties, as it moved in tandem with a decline in stock markets, the analysts added.

JPMorgan did not rule out further downside for Bitcoin amid the absence of signs of buyer capitulation.

«Open interest in futures and the size of exchange balances indicate less panic or liquidations than in May of last year, particularly with regard to large crypto investors», — the analysts concluded.

According to Bloomberg, the correlation between digital gold and US tech-sector stocks has reached an all-time high.

In January, the IMF warned of contagion risks to stock and Bitcoin markets.

Earlier, MSCI researchers said cryptocurrencies are increasingly influencing the dynamics of securities portfolios.

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