Why Do Multiple Analysts Concur the King Kong Crypto is Overvalued? A Look at Bitcoin’s Value Today
The current Bitcoin (BTC) rally has been met with a lot of criticism by many financial analysts, who claim that the Bitcoin market is overpriced, in spite of its 80% drop and 100% rebound from the low. JP Morgan in a research note recently described that Bitcoin is currently trading above its “intrinsic value”.
Per the research note, Bitcoin’s “intrinsic value” was described as “the estimated cost of production per unit or mining cost”.
As at the 15th of May 2019, JP Morgan’s analysis claims that Bitcoin is currently valued at almost double the breakeven cost of mining BTC. BTC was priced $7,700, and the cost of mining one Bitcoin is about $4,000.
Echos Of Bitcoin’s 2017 ATH
Holger zschaepitz, a market analyst and writer adds that according to the research note, this current BTC rally “carries echoes of late 2017” when the digital asset reached its all time high.
“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.”
JP Morgan, however, has been bearish on the digital currency in the past, saying that Bitcoin can only be used as an investment fund in a “dystopia scenario” not as “digital” gold, and also believe that the value of Bitcoin will still drop to $1,260.
Jamie Dimon, the chief executive of JP Morgan has in the past insulted the idea of Bitcoin calling it a “fraud”.
BTC Stock-To-Flow Ratio
Bitcoin (BTC) is also being traded over its stock-to-flow ratio at the moment.
Stock-to-flow ratio is the quantity of an asset ‘above ground’ and how much of the asset is issued per year. Statistical analyst, PlanB, stated that according to current BTC charts, Bitcoin is currently overpriced with about $1,500.
This however, does not mean the coin’s value will drop, it has traded well above the stock-to-flow in the past in bullish markets.
Based on previously mentioned analysis, some Bitcoin investors may be tempted to pull out and liquidate their assets, while some believe them to be absurd. Analysts at JP Morgan further stated that:
“defining an intrinsic value for any cryptocurrency is challenging… views range from researchers arguing that it has no fundamental value, to others estimating fair values in excess of current prices.”
The fact still remains that Bitcoin is a revolutionary digital asset and human game theory, so trying to pin a fair price for the asset will be somewhat illogical. Also the Bitcoin market is a very volatile one, so any speculation on any single model or chart will be irrational.
Tom Lee, of Fundstrat Global Advisors in the past stated that Bitcoin is priced at 2.5 times its mining cost, so based on the history of BTC, Bitcoin is still undervalued.
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Bitcoin’s price is $44,935.23 BTC/USD exchange rate today. The real-time BTC market cap of $840.86 Billion currently ranks #1 with a chart dominance at 62.37%, daily trading volume of $39.08 Billion and live coin value change of BTC 0.64 in the last 24 hours.
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