Bitcoin has traded sideways in the past day but it hit an intra-day high at $44,312 for 13 percent weekly gains.
However, JPMorgan says that based on its volatility in reference to gold, it’s trading over 12 percent above its rightful value at $38,000.
Bitcoin has continued to recover after a capitulation that saw it shed over 50 percent from its November high. In the past week, the cryptocurrency has gained 13 percent, setting a high at $45,210 in that time. However, according to analysts at JPMorgan, the crypto is trading above its rightful value. The bank believes BTC should be trading at $38,000, basing their evaluation on a comparison with the volatility that gold has shown in recent months.
At press time, BTC was trading at $43,467, shedding 1.34 percent in the past day. The top crypto set an intra-day high of $44,312 before dropping some of the gains shortly after.
BTC’s market cap now stands at $823 billion, making it the ninth-most valuable asset in the world, just below Tesla. The cryptocurrency has continued to rise in profile as an institutional asset, with the likes of KPMG Canada being the latest batch of companies to add it to their balance sheet. It has also continued to offer marginalized groups a censorship-resistant way of transacting and raising funds for various causes.
Despite all these, JPMorgan believes that BTC is overvalued at its current price.
JPMorgan: Bitcoin is only worth $38,000 but long-term target is $150,000
In their latest report, analysts at the American banking conglomerate said that Bitcoin’s fair value is $38,000. They claimed to have based their evaluation on BTC’s volatility in comparison with gold, the asset that Bitcoin has been touted to be bringing an end to as the preferred store of value.
Led by Nikolaos Panigirtzoglou, the analysts claimed that Bitcoin is four times more volatile than gold. If this volatility ever narrows down to three, the fair price of BTC would be $50,000, they claimed.
To them, Bitcoin’s biggest challenge is its volatility. However, for crypto traders, this is where all the money lies. The consistent price moves ensure that traders can make money every other day, regardless of whether Bitcoin is going up or down. As a store of value, however, this would make Bitcoin that much less suited than gold or even bonds.
The strategists wrote:
The biggest challenge for Bitcoin going forward is its volatility and the boom and bust cycles that hinder further institutional adoption.
In the long term, JPMorgan is bullish on BTC, as it has always been. This time, the analysts have raised their target price for BTC from $146,000 to $150,000. At this price, BTC’s market cap would be at par with all the gold that’s held privately for investment purposes, JPMorgan said.
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