- JP Morgan said it thinks the fair price of bitcoin is 28% above its current levels, adding that it sees opportunity in the crypto markets.
- Cryptocurrencies fell dramatically in 2022 as investors abandoned riskier investments as the storm clouds gathered.
- But JPMorgan said it generally sees an “upside” for the bitcoin and crypto markets after the sell-off, making the digital asset a preferred alternative investment.
JP Morgan has said that the fair price of bitcoin is up 28% from its current levels, implying that the cryptocurrency has “significant upside from here” after a dramatic selloff.
The bank said in a note on Wednesday that crypto has overtaken real estate as one of its preferred “alternative assets” — assets that don’t fall into specific categories like stocks and bonds.
It said it stood by its view that $38,000 was a fair value for bitcoin. This figure is up 28% from bitcoin’s level of $29,722 on Wednesday morning.
“Last month’s crypto market correction resembles the relative capitulation of last January/February and going forward we see an upward trend for bitcoin and crypto markets more generally,” noted the bank’s strategists, including Nikolaos Panigirtzoglu. said in.
Rising inflation and interest rates, the war in Ukraine and the recession in China have caused cryptocurrencies to fall in 2022, forcing investors to abandon assets deemed risky.
Bitcoin is down about 37% for the year, while Ethereum is down around 48%. The total market cap of all cryptocurrencies fell from around $3 trillion in November to $1.3 trillion in May.
However, JP Morgan said the sell-off has hurt cryptocurrencies more than other alternative investments such as private equity, private debt and real estate. Strategists said in the note that this suggests that there is more room for crypto to rally.
“Thus we replace real estate with digital assets with hedge funds as our preferred alternative asset class,” he wrote.
Strategists said the dramatic collapse of the TeraUSD stablecoin and the connected Luna cryptocurrency had worsened sentiments among many crypto investors. But he said so far there is little sign that venture capital funding in crypto is drying up.
However, the investment bank said it was now less keen on alternative investments, having previously changed its ranking from “overweight” to “underweight”.