Trader Tears into JP Morgan Analyst for Wrongly Pegging Bitcoin’s Intrinsic Value to its Mining Cost


The bulls are out and Bitcoin and crypto market now looks greener with Bitcoin cruising past $9000 mark. Now, this has been the talk with numerous analysts and crypto enthusiasts saying the market is slowly picking up.

However, in a thread of tweets, a renowned economist, Alex Kruger, has explained that the increased interest by institutions, is the reason why the crypto market is recovering.

One of the tweets read:

“JP Morgan analyst acknowledges what has been relatively obvious for about two months already: it is mostly institutions behind the bitcoin bull-run, rather than retail investors, as it was during the 2017 mania.”

The comments were made after an article surfaced claiming that the recent Bitcoin spike was a result of increased dominance by institutional investors. AmbCrypto reports that the article in question was in reference to Nikolas Panigirtzoglou who noted that Bitcoin’s trading volumes have been on an increasing trend since the start of the year clocking $725 billions in May.

Panigirtzoglou attributed the surge to entry of institutional investors in the market who are controlling the recent bull run.

Bitcoin’s Mining Costs Determined by Market Prices

However, Kruger noted that Panigirtzoglou was incorrect due to his earlier claims where he said that the intrinsic value of Bitcoin was controlled by the coin’s production costs which is the mining cost. Kruger noted:

“This same analyst a month ago wrote about how bitcoins’ intrinsic value is determined by its mining cost (which is incorrect) and how bitcoin was at the time trading above intrinsic value (overpriced). How much do these bankers get paid to be late or wrong?”

The economist argued that the cost of mining Bitcoin was determined by the market price. He explained that when Bitcoin’s price is high it becomes more lucrative to mine it.

In this case, there are more miners who will be interested in cracking the blocks thereby increasing the block rate. In order to ensure that all parameters are kept in equilibrium, the difficulty involved in mining adjusts itself and thereby increasing the mining/ production costs.

In the recent past, the crypto market has experienced a bull run leading to many analysts who had spelled doom for the market to try and save their faces. Panigirtzoglou is one of the analysts who had predicted doom for the crypto market but has now been forced to come up with a different explanation for the recent surge.

Do you believe the entry of institution investors is the reason behind the recent bull surge in the crypto market? Share your views with us in the comments section.

Get Daily Headlines

Enter Best Email to Get Trending Crypto News & Bitcoin Market Updates

What to Know More?

Join Our Telegram Group to Receive Live Updates on The Latest Blockchain & Crypto News From Your Favorite Projects

Join Our Telegram

Stay Up to Date!

Join us on Twitter to Get The Latest Trading Signals, Blockchain News, and Daily Communication with Crypto Users!

Join Our Twitter

Add comment

E-mail is already registered on the site. Please use the Login form or enter another.

You entered an incorrect username or password

Sorry, you must be logged in to post a comment.
Bitcoin Exchange Guide