Bitcoin Rally To $8,000 Smells Like Late-2017: JP Morgan Analysis
Save for Friday’s sudden selloff, Bitcoin (BTC) has been on an absolute tear over the past few weeks. Since early-April, the asset has moved from $4,200 to a recent peak of $8,350 — effectively a gain of 100% — and is seemingly preparing itself for another leg higher.
While many believe that this move comes off the back of booming on-chain statistics and strong fundamental developments, one Wall Street firm argues that this isn’t the case.
Related Reading: Binance and Coinbase Traffic Spikes as Bitcoin Price Surges 81% YTD
Bitcoin Diverging From Intrinsic Value
In a recent research note from JP Morgan, obtained by Holger Zschaepitz, a German economist and author, it was explained that Bitcoin is trading above its “intrinsic value”. The note (seen below) suggests that the cryptocurrency’s “intrinsic value” is the estimated cost of production per unit or mining costs. In fact, JP Morgan’s estimates show that BTC is currently (as of May ~15th) trading above its breakeven mining cost by two times.
Bitcoin Reaches ‘Logical’ Support As Volatility Wanes, Explosive Move Incoming
Thursday January 23, 2020
After Bitcoin price rocketed last month from lows around $6,400, the crypto asset touched over $9,000 before falling lower to what a well-known financial market analyst says is “logical support.” Meanwhile, a tool designed...
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#Bitcoin prices diverge from intrinsic value, carrying echoes of late 2017, JPM says. pic.twitter.com/DImDoSMv8L
— Holger Zschaepitz (@Schuldensuehner) May 17, 2019
2 Genuine Reasons Why Bitcoin Will Hit $20,000 in 2020
Monday January 20, 2020
Coming into the first quarter of 2020, offbeat asset bitcoin is already proving to be the year’s best investment. The benchmark cryptocurrency’s upside run has returned roughly twenty-fold returns in January. Its rate peaked...
The post 2 Genuine Reasons Why Bitcoin Will Hit $20,000 in 2020 appeared first on 12bitplay - Bitcoin Play.
Zschaepitz adds that JP Morgan notes that this current rally “carries echoes of late-2017”, which was when BTC spectacularly rallied and decoupled from any fundamentals on the back of hype.
Related Reading: XRP Holds Strong After JP Morgan ‘Slaps’ Ripple With Bank-Centric Crypto
Indeed, Fundstrat’s Tom Lee claims that Bitcoin historically trades at around two times its intrinsic value, especially in bull markets.
It is important to note that JP Morgan has been historically bearish on Bitcoin. As NewsBTC reported previously, analysts from the American bank suggested that Bitcoin may only be a good hedge in a “dystopian scenario”, not a digital gold as some expect. They go on to state that BTC could plunge to $1,260 eventually. And, of course, JP Morgan’s impassioned chief executive, Jamie Dimon, has been enamored with calling BTC a “fraud” and a similar ilk of insults.
Yet Fundamentals Are Better
Is JP Morgan right in its assumption that Bitcoin is trading too far above its intrinsic value?
Well, maybe not. As Dan Held, the co-founder of Interchange, recently pointed out, the ecosystem’s fundamentals and infrastructure are much stronger now than in 2017 or 2018, sans mining costs.
Case in point, the industry has some of the biggest names in finance and technology delving in. Square, through its Cash App and chief executive Jack Dorsey; Fidelity Investments; E*Trade, Bakkt, and ErisX are among the developments in the space that make this rally entirely different than anything before it. Thus, some deem it logical that warnings of a large market correction can be deemed moot.
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A Bitcoin Plunge To $8,000 On The Horizon, As Bulls Show Weak Hands
Friday January 24, 2020
Bitcoin price failed to stay above the key $8,500 support area and extended its decline against the US Dollar. BTC price is likely to continue lower towards $8,000 or $7,880. Bitcoin started a strong...
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