A group of analysts at JPMorgan Chase, led by Nikolaos Panigirtzoglou, calculated “fair price” Bitcoin based on its level of volatility compared to gold – the largest cryptocurrency was overvalued by 12%.
Given that bitcoin’s volatility is four times that of gold, the fair value of this asset is $38,000. When the excess is tripled, the actual price of bitcoin rises to $50,000. For comparison, today the market value of the cryptocurrency exceeds $43,000. The asset’s instability is one of its main problems, analysts say: “The biggest impediment to Bitcoin’s advancement is its volatility and boom and bust cycles, which hamper its eventual institutional adoption.”.
According to Mr. Panigirtzoglou, the long-term theoretical target for Bitcoin, where its total market valuation equals the total value of gold used for investments, is $150,000, although a year ago that figure was $146,000. Analysts also said that January’s bearish price of bitcoin resembled less of a full capitulation than the events of May last year, when the largest cryptocurrency fell in price by half.