Sarah Tran
Independent Analyst
- While Bitcoin price plunged to lows of early 2021, JPMorgan analysts are taking a bearish stance on the leading cryptocurrency.
- The investment bank suggested that institutional investors are leaving the BTC market for gold.
- The analysts believe that the pioneer digital asset is still on track to reach $140,000 in the long term.
JPMorgan analysts believe that institutional investors may replace Bitcoin with gold after the recent market-wide crypto price crash.
JPMorgan puts Bitcoin price fair value at $35,000
Bitcoin price dropped to nearly $30,000 amid the crypto market turbulence. While the pioneer cryptocurrency and altcoins suffered a massive crash, gold has risen over 6% since the beginning of May.
The leading cryptocurrency has been known as digital gold, a narrative that has been the anchor of driving institutional adoption. JPMorgan analysts previously forecasted that BTC would hit $140,000 over the long term.
The experts even suggested that Bitcoin would become a compelling alternative to gold. The convergence in volatilities between the crypto and the yellow metal is unlikely to happen quickly and could take multiple years.
In a note to its clients this week, JPMorgan suggested that institutional investors are now selling Bitcoin in favor of gold. The analysts remarked that the bellwether digital currency is experiencing one of the wildest historic crashes in a day, plunging from its intraday high of above $43,000 to under around $31,000.
The investment bank also cited open interest data in Bitcoin futures contracts on the Chicago Mercantile Exchange, highlighting:
The Bitcoin flow picture continues to deteriorate and is pointing to continued retrenchment by institutional investors. Over the past month, bitcoin futures markets experienced their steepest and more sustained liquidation since the Bitcoin ascent started last October.
Despite the bearish take on the sharp reversal in Bitcoin price trend, JPMorgan is still convinced BTC will continue on track to hit $140,000 as per its previous forecast. The new note reads:
This $140k price should be thought of as a long-term theoretical target assuming a convergence of Bitcoin volatility to that of gold and an equalization of bitcoin allocations to that of gold in investor portfolios.
According to the analysts, the current fair value for Bitcoin based on a volatility ratio of BTC to gold would be a quarter of the forecast, at $35,000.
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