Analysts at JPMorgan Chase have lowered their long-term bitcoin price target of $150,000 to $38,000 after the price of the flagship cryptocurrency dropped from a $67,000 all-time high to a $34,000 low before recovering.
The analysts had predicted BTC’s price would come close to the $150,000 in the long run if the cryptocurrency’s volatility dropped and institutional investors moved toward bitcoin over gold. At the time the analysts led by Nikolaos Panigirtzoglou revealed they see bitcoin as a scarce product that is increasingly competing with gold for investors’ preference as a hedge against inflation.
According to Business Insider, the analysts now see their previous price prediction as “unrealistic.”
Our previous projection that the bitcoin to gold volatility ratio will fall to around 2x later this year seems unrealistic. Our fair value for bitcoin based on a volatility ratio of bitcoin to gold of around 4x would be 1/4th of $150,000, or $38,000.
JPMorgan’s prediction at the time saw “little doubt” that bitcoin will keep on competing with gold, especially as millennials become more powerful in the investing universe. Per the analysts, taking into account how “big the financial investment into gold is,” any such “crowding out of gold as an ‘alternative’ currency implies big upside for bitcoin.”
At the time, the analysts noted that to hit $150,000 BTC’s volatility would have to fall sharply. The flagship cryptocurrency’s recent drop from a new high to a $34,000 low before recovering seemingly threw cold water on that hypothesis, which could see institutional investors move away from crypto.
Per the analysts, one of the cryptocurrency’s biggest challenges going forward involves its volatility and the “boom and bust cycles that hinder further institutional adoption.” The analysts added that in the ongoing sell-off they have not yet observed signs of capitulation.
As reported, most of JPMorgan’s clients have revealed they see the price of Bitcoin surpass the $60,000 before the end of this year, with 41% saying the cryptocurrency will trade at that level by the end of the year, 9% seeing it above $80,000 and 5% calling for $100,000.
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