JPMorgan Cuts Bitcoin Fair Price Estimate to $38K Amid Volatility
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Leading investment bank JPMorgan has changed its view on the long-term price estimate of Bitcoin. The institution had estimated the long-term price at $146,000 in November, when Bitcoin surpassed $60,000. One of the most important reasons for this change relates to the increased volatility that assets have faced recently.
JPMorgan Changes Long-Term Bitcoin Price Estimate JPMorgan, one of the world's largest banks, has radically changed its mind about what price Bitcoin will reach in the long term. While JPMorgan's estimates were bullish last year, when it estimated that number at around $150,000, it has lowered its estimates due to the situation the market is going through this year. The new price was estimated at $38,000, about a quarter of the previously calculated figure, in a different context regarding gold, Bitcoin, and market volatility.
In this regard, JPMorgan stated in a note: "Our previous expectation that the Bitcoin-to-gold volatility ratio will decline to about 2x later this year appears unrealistic. The fair value of Bitcoin based on a Bitcoin-to-gold volatility ratio of about 4x would be 1/4 of $150,000, or $38,000." General.
This, according to the bank, makes it difficult for institutions to place their bets on Bitcoin for reasons other than it being a speculative asset. The memo concluded: “Bitcoin’s biggest challenge in the future is its volatility and boom-and-bust cycles that hinder its institutional adoption.” The recent decline in cryptocurrency prices is attributed to several factors. Some considered that the recent announcements from the Federal Reserve would impact cryptocurrency markets, which have shown a correlation with other markets such as the S&P500. One such person was Arthur Hayes, who in a recent brief titled “Circo Loco” recommended a “wait and see” approach for investors wanting to enter the cryptocurrency market.
A report by Huobi titled “Taper Landed” released in December also explained that the upcoming taper will affect the growth of the cryptocurrency market. JPMorgan believes the market could fall further, as it has found no signs of capitulation in recent market movements. Source
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