JPMorgan issues first-ever bitcoin fair-value estimation
US investment bank sees bitcoin rising to $150,000 in the long term
JPMorgan Chase & Co, the world’s largest investment bank, has provided a ‘fair value’ estimate of bitcoin’s (BTC’s) worth for the first time ever.
JPMorgan
The team of JPMorgan strategists, led by managing director Nikolaos Panigirtzoglou, calculated the fair-value of the world’s first and largest cryptocurrency at around $38,000 – $6,000 less than the level at which it traded on Wednesday evening.
They stated: “The biggest challenge for bitcoin going forward is its volatility and the boom and bust cycles that hinder further institutional adoption.”
Bitcoin enjoyed substantial growth in 2021, with its market capitalisation rising from just over $500bn (£369bn, €437.6bn) to as high as $1.27trn. Increasing institutional acceptance fuelled much of this expansion, with crypto-asset managers such as Grayscale seeing their assets under management (AUM) surge to record highs (currently $40.4bn, according to a recent tweet).
Leading payment providers such as PayPal and Square also allowed their users to purchase cryptocurrencies for the first time.
Cryptocurrency correction
Between November and January, however, the value of bitcoin halved while the capitalisation of the total cryptocurrency market fell from almost $3trn to $1.5trn. Such a substantial sell-off has done nothing to undermine the accusation that cryptocurrencies are innately volatile.
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JPMorgan’s strategists argued that the latest price correction seemed like less of a capitulation than the sell-off triggered in May of 2021 by China’s cryptocurrency crackdown.
However, it highlighted the “more long-standing and thus more worrisome” reduction in futures open interest and reserves on exchanges that has taken place since November.
Nonetheless, JPMorgan’s strategists forecast that bitcoin will likely reach $150,000 in the long term, equivalent to the value of all the gold held privately for investment purposes.
Although this would represent a marked increase from bitcoin’s current value, it pales in significance to the recent projection given by FSInsight. This financial research boutique organisation argued that bitcoin could reach $200,000 by the end of 2022.
