JP Morgan believes Bitcoin should be priced at $38.000 and is currently undervalued.
In an institutional email sent on Wednesday, May 25 to its clients, JP Morgan Chase, one of the main investment companies in the United States, has indicated that The price of each Bitcoin unit should be $38.000In this regard, the firm has explained that the cryptocurrency is undervalued by 30%.
In institutional information, analysts at the North American company have pointed out that, contrary to popular belief, there are no signs that indicate a long-term bear market. On the contrary, everything seems to indicate that the fall in prices in May is due to a recap of the January and February market.
In fact, JP Morgan specialists have maintained the same fair price for Bitcoin since February, when Bitcoin was trading at almost $38.000.
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NVT model supports JP Morgan
The idea that Bitcoin is trading 30% below its fair price is supported by the Network Value to Transaction (NVT) model data, a metric developed by market analyst Willy Woo, which is calculated by dividing the value of the network (market cap) by the daily USD volume transmitted through the blockchain.”
In fact, Bitcoin's NVT model metrics indicate that The price of the cryptocurrency should be at $43.000, slightly above JP Morgan's estimate.
The start of an upward trend for cryptocurrencies
The company's strategists also point out that it is very likely that there will be A potential upside for the Bitcoin and cryptocurrency market in general.
The fall in cryptocurrency prices has been caused by the general collapse of the markets. In this regard, analysts point out that cryptocurrencies have been particularly affected by this fall.
This observation has also led them to think that it is precisely this market (that of cryptocurrencies) that has a greater recovery potential. This has led them to replace other investments, such as real estate, with cryptocurrencies and other digital assets, which have become, along with hedge funds, JP Morgan Chase's preferred alternative assets.
Why is Bitcoin trading down?
As we have already mentioned, one of the reasons why Bitcoin is currently trading down is the general decline in financial markets caused by the war in Ukraine.
Added to this is extreme inflation and rising interest rates, as well as the UST stablecoin collapse and LUNA, which caused the market cap to drop by $50.000 billion. Overall, the market cap of cryptocurrencies has fallen from $3 trillion in November to $1,3 trillion today.
However, as JP Morgan analysts point out, there are signs of improvement. For example, Starkware, an Ethereum startup, has raised $100 million, reaching a valuation of $8.000 billion. Meanwhile, Andreessen Horowitz has announced a $1.500 billion investment in cryptocurrency investments to increase the reserve fund to $4.500 billion.
These new investments indicate that VCs have not lost confidence in cryptocurrencies despite the Terra debacle.
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