JPMorgan Analysts Spread FUD The Big Bank Way, Says Bitcoin May Just Be In Another Bubble


JPMorgan Analysts Say Bitcoin May Just Be in Another Bubble

Following the recent bitcoin rally that has seen the price of the world’s number one cryptocurrency surge from just above the $3k price region earlier in the year to nearly $8k at press time, analysts at JPMorgan Chase Bank have likened the scenario to the bitcoin bull run of 2017, claiming prices may crash again shortly.

Another Boom And Bust

Per sources close to the matter, analysts at JPMorgan Chase, a leading United States-based financial institution, have claimed that the world’s most popular crypto asset, bitcoin has surged beyond its “intrinsic value” again, just as it did in 2017 before slumping in 2018.

Specifically, the experienced financial analysts, which include Nikolaos Panigirtzoglou, calculated bitcoin’s cost of production using inputs such as estimated computational power, electricity expense as well as hardware energy, and came to a conclusion that the digital asset has surge way beyond its intrinsic value.

“Over the past few days, the actual price has moved sharply over marginal cost. This divergence between actual and intrinsic values carries some echoes of the spike higher in late 2017, and at the time this divergence was resolved mostly by a reduction in actual prices,” wrote the analysts.

The April Resurgence

2017 was arguably one of the best years for bitcoin and the cryptocurrency markets in general, as the nascent blockchain-powered digital asset (bitcoin) kissed $20k for the first time in its 10 year history.

The moonshot also had a great effect on altcoins, with many hodlers smiling to the bank.

However, 2018 turned the game on its head, bringing the price of bitcoin to below $4k, only for prices to rise again in 2019.

The rally gained speed this May, taking the price of bitcoin above the $8k price region. However, after the liquidation of $250 million of long positions on BitMEX, the price of bitcoin briefly retraced to $7,050 on May 17 and at the time of filing this report, bitcoin’s price sits at $7,861.

Fair Values Are Hard To Define

“Defining an intrinsic or fair value for any cryptocurrency is clearly challenging,” wrote JPMorgan strategists as a caveat, adding “Indeed, views range from some researchers arguing that it has no fundamental value, to others estimating fair values well in excess of current prices.”

Indeed, the price of digital assets is quite hard to define, as digital assets operate in an entirely different world that traditional financial assets. And as such, using the same yardsticks to calculate the fair value of bitcoin will only yield wrong results.

Despite the fact that JPMorgan recently revealed plans to launch its own stablecoin that would be powered by blockchain technology, it’s worth noting that CEO Jamie Dimon has been totally wrong about bitcoin several times.

With firms like Fidelity Assets and several others joining the bitcoin movement, it remains to be seen whether JPMorgan’s analysts' predictions will come to reality.

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