JPMorgan Says Bitcoin is 13% Overvalued

Despite estimating that bitcoin is currently overvalued by 13%, JPMorgan analysts say the digital currency could reach $150,000

article-image

Blockworks exclusive art by axel rangel

share

key takeaways

  • Bitcoin’s fair value is $38,000, according to strategists from JPMorgan
  • Crypto advocates say that bitcoin’s volatility is an advantage

Based on bitcoin’s volatility ratio to gold, the digital currency is currently overvalued by about 13%, according to a group of JPMorgan strategists.

Bitcoin today is roughly four times as volatile as gold, putting its fair value at $38,000, the strategists, led by Nikolaos Panigirtzoglou, said in a report released Tuesday.

“The biggest challenge for bitcoin going forward is its volatility and the boom and bust cycles that hinder further institutional adoption,” the report said.

“In an upside scenario where there is more normalization in vol to around 3x, the fair value would be around $50k.”

Strategists maintain a higher long term projection for bitcoin, estimating the digital currency will hit $150,000. This is up from analysts’ previous estimate of $146,000 a year ago. 

Crypto advocates argue that JPMorgan strategists are misconstruing bitcoin’s volatility as a weakness.

“The major flaw in JPMorgan’s argument against bitcoin’s resilience is that volatility will hinder broader adoption,” Leah Wald, CEO at digital asset manager Valkyrie Investments, said.

“This stance shows a failure to understand what brings many people and institutions to digital assets and cryptocurrencies in the first place.”

The report comes as the correlation between cryptocurrencies and equities continues to tighten, a trend that threatens bitcoin’s historic status as an uncorrelated asset.

Bitcoin’s investment case is that it is a hedge against other asset classes, Greg Foss, executive director of strategic initiatives at Validus Power Corp, said. The correlation to equities will not last, he added.

“Bitcoin eventually will be viewed as insurance and, therefore, will de-correlate from the rest of the assets,” Foss said.

Data from CryptoQuant suggests bitcoin is currently undervalued. As of Wednesday, bitcoin’s network-value-to-transactions (NVT) ratio — a commonly-used fundamental metric — reached a 10-year low on a 30-day exponential moving average basis. 

Network Value to Transactions (NVT) is the ratio of market capitalization divided by transferred volume that helps to detect whether coins are overvalued or undervalued; Source: CryptoQuant.com

Although the market is still reeling from the recent sell-off, Wald is confident bitcoin will rally soon. 

“When looking at metrics, including active wallet addresses, which are still well above where they were during crypto winter, the amount of bitcoin moving off exchanges, which continues to rise and is often an indicator that savvy traders believe the market will move higher, and the seemingly endless parade of venture investments being announced into the space — we remain firmly bullish,” she said.


Get the day’s top crypto news and insights delivered to your email every evening. Subscribe to Blockworks’ free newsletter now.


Want alpha sent directly to your inbox? Get degen trade ideas, governance updates, token performance, can’t-miss tweets and more from Blockworks Research’s Daily Debrief.


Can’t wait? Get our news the fastest way possible. Join us on Telegram and follow us on Google News.


Tags

upcoming event

MON - WED, MARCH 18 - 20, 2024

Digital Asset Summit (DAS) is returning March 2024. This year’s event will be held in our nation’s capital, where industry leaders, policymakers, and institutional experts will come together to discuss the latest developments and challenges in the ever-evolving world of cryptocurrency. […]

upcoming event

MON - WED, SEPT. 11 - 13, 2023

2022 was a meme.Skeptics danced, believers believed.Eventually, newcomers turned away, drained of liquidity and hope.Now, the tide is shifting and it’s time to rebuild. Permissionless II is the brainchild of Blockworks and Bankless. It’s not just a conference, but a call […]

recent research

Cosmos Hub: ATOM Economic Zone

Research

Replicated Security, the Hub’s Validation-as-a-Service offering that went live in March, is the first step in bringing value accrual to ATOM stakers.

/

article-image

Kenya’s central bank doesn’t seem enamored by the idea of a CBDC but hasn’t slammed the door shut yet

article-image

Both Ethereum and Solana have enjoyed vibrant DeFi environments, but this has not yet been the case for Cosmos

article-image

As Japan takes important step forward on stablecoins, industry participants say, proposed US laws around such crypto assets remain in flux

article-image

Stablecoins offer global financial access and on-chain transactions without limitations, while FedNow falls short in terms of utility, global reach and inclusivity

article-image

Connext wants to make using layer-2s and layer-3s a seamless experience

article-image

GameStop has been dabbling in Web3 initiatives since at least January 2022