Strategists at investment banking giant JPMorgan say bitcoin’s price of roughly $61,686 is beyond because its actual fair market value is $35,000, which is approximately 45% lower than its present price.
In a note shared to clients reported by Bloomberg, the megabank said it made the assessment by comparing the volatility of the benchmark cryptocurrency with that of gold. At present, bitcoin is 4x more volatile than the precious metal.
Despite being on a multi-year ascent, JPMorgan believes bitcoin is not attractive to investors at current prices. Nonetheless, the strategists expect cryptocurrencies to continue to outperform into the next year. According to them, a significant reduction in bitcoin’s relative volatility would open the gates for a new influx of institutional money, setting BTC up for a possible upswing to $100,000 per coin in 2022.
“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.”
JPMorgan Recommends Real Estate And Hedge Funds Instead Of Crypto
The bank’s analysts then stated that other asset classes, including private equity and private debt, will register a gain of 11% in 2022, which is double the 5% return from stocks. Crypto will also see a modest 15% increase.
However, they do not recommend crypto to investors as a “core holding” owing to its immense volatility. Instead, JPMorgan advises institutional investors to put their money into real estate and hedge funds. The megabank’s strategists expect hedge funds and real estate (especially industrial and residential properties) to grow by leaps and bounds on account of growing expectations of economic growth.
JPMorgan And Cryptocurrency
As we speak, financial advisors working with JPMorgan are allowed to assist wealthy clients to buy and sell five cryptocurrency-based products from Grayscale Investments and Osprey Funds. This includes exposure to Bitcoin, Ethereum, Bitcoin Cash, and Ethereum Classic.
Despite bitcoin’s impressive performance over the years, JPMorgan CEO Jamie Dimon remains unenthused. In an interview in September, Dimon predicted that bitcoin could rise 10X within five years. Yet, he was still not interested in investing in the crypto asset. Dimon drew the ire of the community the following month after calling bitcoin “worthless”.
That said, Dimon is yet to be convinced. But as long as clients are interested, JPMorgan will continue to dabble in cryptocurrency.