News
An inevitable decline in prices in sight?
4:00 p.m. ▪ 3 min read ▪ by Luc Jose A.
As the cryptocurrency market goes through a period of valuation fluctuations, JPMorgan analysts provide critical insights into the sustainability of this recovery. In a recent report, they expressed skepticism about the sustainability of current rallies, particularly for bitcoin.
A strategic rebound rather than a sustainable one
According to JPMorgan analysts, the current rally in crypto asset prices, especially BTCseems more tactical than indicative of a sustained uptrend. Bitcoin is currently trading around $67,500. Analysts estimate that the value of this BTC is far greater than its estimated production cost of $43,000.
In addition, they use a special method to compare the price of crypto assets to that of gold. In fact, they adjust the prices taking into account volatility, that is, the price fluctuations of both assets. According to their calculations, the price of gold, taking into account its volatility, would be around $53,000. They explain that the current price of bitcoin is quite high compared to this value, suggesting a regression towards this average.
In other words, in the long term, major jumps in BTC price could be limited. The crypto-asset would tend to stabilize around this comparison with gold adjusted for volatility, according to them.
Impact of liquidations and political outlook on markets
Bitcoin futures have been weakened recently by large liquidations, including by Gemini and Mt. Gox creditors, as well as the sale of bitcoin seized by the German government, analysts report. These factors are temporary, they say, and they anticipate a recovery in these futures by August.
In addition, they consider that the potential return of Donald Trump to the presidency could favor crypto assets and gold. Trump is seen as more favorable than the current Biden administration to the cryptocurrency sector.
Trump’s proposed trade policies could also encourage emerging market central banks to further diversify their gold holdings. These political and economic developments could significantly alter future market trends.
In summary, the Immediate outlook for BTC and other cryptos look promising. However, an overly optimistic interpretation of current trends would be detrimental. Analysts therefore recommend increased vigilance to investors.
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Luc José A.
A graduate of Sciences Po Toulouse and holder of a blockchain consultant certification issued by Alyra, I joined the Cointribune adventure in 2019. Convinced of the potential of blockchain to transform many sectors of the economy, I am committed to raising awareness and informing the general public about this constantly evolving ecosystem. My goal is to enable everyone to better understand blockchain and seize the opportunities it offers. Every day, I strive to provide an objective analysis of current events, decipher market trends, relay the latest technological innovations and put into perspective the economic and societal challenges of this ongoing revolution.
DISCLAIMER
The views, thoughts and opinions expressed in this article are solely those of the author and should not be considered investment advice. Do your own research before making any investment decision.