Bitcoin’s ‘fair value’ is 12% below current levels based on its volatility in relation to gold, JPMorgan says

Bitcoin’s fair value is 12% lower than its current price. This is based on volatility relative to gold. According to JPMorgan.

According to strategists led by Nikolaos Pantigirtzoglou, the bank’s analysis assumed that bitcoin was four times more volatile than gold. According to them, bitcoin’s value would then be one quarter of $150,000 or $38,000.

They added that bitcoin would have a fair value of around $50,000 if it were three times more volatile than gold.

Bitcoin traded 1.8% higher at $43,564 on the last day, close to its highest level for a month. However, it is still down 8% this year according to data from CoinMarketCap.

JPMorgan’s long term price target bitcoin is $150,000. This is an increase from last years’s $146,000 target. It assumes that bitcoin’s volatility level matches that of gold. If so, bitcoin allocations are given the same weighting in investor portfolios as gold.

The bank believes that this target will not be met anytime soon because of the possibility of bitcoin and gold becoming a seamless intersection in the near future.

The year has seen a difficult start for Bitcoin. This was due to a combination of high inflation and a Federal Reserve that is becoming more hawkish. The top cryptocurrency dropped below $36,000 and ether fell below $2,500, both of which are below record highs of $63,000 and $4800, respectively.

The huge amount of cash generated by fiscal and monetary stimulus programs during a pandemic has been a major driver of crypto over the past two years. This is about to change.

JPMorgan stated that January’s crypto market correction in which bitcoin lost 17% value looks less like capitulation or an extended period in decline than May last year, when bitcoin dropped 35%.

However, bitcoin’s volatility is the greatest challenge according to strategists, which makes it difficult for institutional investors to take advantage of.

JPMorgan stated that cryptocurrencies are experiencing hot growth relative to alternative asset classes. However, this does not have to be due to continuously rising prices.

The strategists stated that while there is no need for the price appreciation of existing cryptos such as bitcoin or ethereum (which are already very popular among institutional investors), this growth can be more likely to result from the expansion and diversification of digital assets.

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