The Bitcoin price is 60% down from its all-time high of $69,000. The crypto market cap is also down to $1.3 trillion from $3 trillion.
Bitcoin is currently hovering around 29,000 after breaking a key support point to trade below $31,000 for the first time since July 2021. According to JPMorgan Chase & Co (NYSE: JPM), the current price of Bitcoin is 28% undervalued. This is a reiteration of its February prediction when Bitcoin was trading at $43000. According to the bank, Bitcoin’s fair value is 38,000. The bank’s strategists, led by Nikolaos Panigirtzoglou, stated that they see upside for Bitcoin going forward.
“The past month’s crypto market correction looks more like capitulation relative to last January/February and going forward we see upside for bitcoin and crypto markets more generally,” they said.
The Bitcoin price is 60% down from its all-time high of $69,000. The crypto market cap is also down to $1.3 trillion from $3 trillion. It is also worth noting that the market has been hit harder than traditional assets like private equity and real estate. While investors are contemplating whether they should go all out into the market or not, JPMorgan believes that there is more room for a rebound.
The report from JPMorgan also mentioned that Bitcoin is their preferred asset class along with hedge funds. According to them, these would replace real estate due to what they term “potential lagged repricing” in private debt, private equity, and real estate. It is important to note that alternative assets are those that are not cash, stock, or bond.
The crypto market is battling with several factors including the expected hike in interest rate in response to the rising inflation in the US, the collapse of the Terra ecosystem, and the Russian invasion of Ukraine. Also, the 2018 and 2019 Bitcoin draught is expected to repeat itself as the asset had equally staged an all-time high of near $20000 before taking a deep fall, then remaining stable till its third halving event. However, the JPMorgan strategists believe that this will not be repeated.
“The trajectory for VC funding would be crucial in helping the crypto market to avoid the long winter of 2018/2019,” they said.
Venture Capital (VC) funding coupled with the Initial Coin Offering boom is a good thing for the crypto market to resist any factor that could cause a further price fall. These include Andreessen Horowitz‘s $1.5 billion allotments for crypto investment. In addition, Starkware, an Ethereum scaling startup, has come up with $100 million at an $8 billion valuation.
“Thus far there is little evidence of VC funding drying up post-Terra’s collapse. Of the $25 billion VC funding year-to-date, almost $4 billion came after Terra. Our best guess is the VC funding will continue and a long winter similar to 2018/2019 would be averted,” added the strategists.
Excellent John K. Kumi is a cryptocurrency and fintech enthusiast, operations manager of a fintech platform, writer, researcher, and a huge fan of creative writing. With an Economics background, he finds much interest in the invisible factors that causes price change in anything measured with valuation. He has been in the crypto/blockchain space in the last five (5) years. He mostly watches football highlights and movies in his free time.
