JP Morgan Publishes Perspectives Report Related to Bitcoin’s (BTC) Value
JP Morgan, one of the main financial institutions in Wall Street, released a perspectives report related to Bitcoin (BTC) and its price performance. According to the bank, the most popular digital asset could reach $1260 in the near future before starting to grow once again.
Diar, a crypto research firm, made an analysis of the information released by the popular bank. Although financial institutions did not enter the crypto market as several were expecting, JP Morgan analyzed several aspects of Bitcoin and how its price correlates with production costs.
As per to the bank, one of the ways to estimate a quantifiable intrinsic value for Bitcoin is to treat it as a commodity and take into account the cost of production. The bank concludes that an estimated production cost for miners with cheap electricity prices at $2400. Nevertheless, Diar estimates that the average should be close to $3100 with optimal equipment.
As there are fluctuations in hash power, this might result in smaller miners leaving the market. Thus, reducing the production cost. This is why the bank believes that Bitcoin as a price floor of $1260. Back in December 2018, Bitcoin hash rate dropped down 50% since August 2018. Since that moment, after a network difficulty reduction, the number of miners in the network started to grow once again.
Diar explains about the future production costs:
“The cost of production will, however, go down on the back of new, more efficient equipment being deployed. However, with a limit set on sale quantity, efficient miners growth will likely come online gradually. But the halving only 18 months away would put the production cost of Bitcoin right back up to $3000 at current hash power levels.”
At the time of writing this article, Bitcoin is being traded around $3427 and it has a market capitalization of $60 billion. In the last 24 hours, the most popular digital asset lost 1.43% of its value.
JP Morgan’s CEO, Jamie Dimon, has been criticizing Bitcoin saying that it is a fraud and that governments would ultimately crash it.