JPMorgan thinks Bitcoin is overvalued at this stage, but expects crypto to outperform in 2022

  • JPMorgan says that the BTC price fair value is at nearly a 50 percent discount from its current market price.
  • But JPMorgan remains bullish that the crypto asset class will continue to outperform come the next year of 2022.

American banking and investment giant JPMorgan believes that at the current BTC price of $63K, the world’s largest cryptocurrency seems overvalued. In its recent report to investors, the bank asserted that Bitcoin’s fair value is $35,000 as per the bank’s own pricing model.

It means JPMorgan is expecting BTC’s fair price to be nearly 50 percent from the current one. However, the bank strategists also added that a price target of $73,000 for Bitcoin seems reasonable if the volatility continues to extend into next year. As reported by the bank, the American multinational bank noted:

This challenges the idea that a price target of $100K or above, which appears to be the current consensus for 2022, is a sustainable Bitcoin target in the absence of a significant decline in Bitcoin volatility.

Although JPMorgan thinks that the current entry point is “unattractive”, it remains bullish on a multiyear front. But it still doesn’t recommend crypto as investors’ “core holding” due to its strong volatility.

Cryptocurrencies will continue to outperform in 2022

In its report to investors, JPMorgan said that the banking giant has been focusing on some alternative investments which also include digital assets. The banking giant also noted that alternative asset classes like private debt and private equity will return 11 percent returns next year. This will be more than double the 5 percent returns in stocks and fixed income.

The JPMorgan analysts spoke about the recent volatility in September following a strong rally in August. However, since the end of September, the overall cryptocurrency market valuations have surged by 30 percent so far. Currently, the global cryptocurrency market cap floats just above $2.75 trillion.

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The recent rally over the last month comes on the backdrop of strong optimism surrounding the launch of the first Bitcoin futures contracts. Since the September closing of around $42,000, the BTC price has gained nearly 50 percent and is currently trading close to its all-time high. But the strategists from the bank have also recently warned that the Bitcoin Futures ETFs might come at a cost.

Read More: JPMorgan strategists warn that Bitcoin Futures ETFs may come at a cost

However, the banking strategists still believe that Bitcoin remains a better inflation hedge than Gold. “The re-emergence of inflation concerns among investors has renewed interest in the usage of Bitcoin as an inflation hedge,” the bank’s analysts wrote. Over the last year, Bitcoin has outperformed Gold by a massive value while truly becoming the “digital gold”.

However, JPMorgan chief and Bitcoin critic Jamie Dimon continues to hold its anti-Bitcoin stand. Dimon said that even if the Bitcoin price shoots 10x over the next decade, he wouldn’t invest in it. He also called the world’s largest cryptocurrency “worthless”.

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About Author

Bhushan is a FinTech enthusiast and holds a good flair for understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In his free time, he reads thriller fictions novels and sometimes explores his culinary skills.

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