JP Morgan, one of the most renowned American investment companies, believes that bitcoin (BTC) is currently undervalued. And according to their estimates, it is almost 30% below its “fair price”.
for the institution, the price of the cryptocurrency should be about 38,000 dollars per unit. Meanwhile, about 29,700 are being traded on exchanges at the time of writing, as the CriptoNoticias price calculator shows.
The price estimates from JP Morgan were sent on the morning of this Wednesday, May 25, to its clients, through an institutional mail, according to sources such as Forbes.
According to the strategists of the North American company, “the correction of the cryptocurrency market last month looks more like a capitulation in relation to January/February” than a prolonged bear market. In fact, they foresee a potential rise “for the bitcoin and cryptocurrency markets in general”.
During the collapse of the markets worldwide in recent months, JP Morgan alleges, cryptocurrencies have been the most affected. This gives them the idea that it is in this market precisely where there is greater potential for recovery. For this reason, they say in the note, they decided to replace other investments with cryptocurrencies.
“Therefore, we replace real estate with digital assets as our preferred alternative asset class alongside hedge funds,” he quotes. Business Insider.
It is striking that the investment bank maintains the same “fair price” for bitcoin as it held last February, as we reported in this newspaper. By then, the cryptocurrency was trading very close to the JP Morgan price, unlike this opportunity.
One Metric Supports JP Morgan’s Reading on Bitcoin Price
JP Morgan’s reading on the price of bitcoin is based on a widely used metric to evaluate the price that the cryptocurrency should have: the NVT model (Network Value to Transactions).
This metric, developed by market analyst Willy Woo, “is calculated by dividing the value of the network (market capitalization) by the daily volume in USD transmitted through the blockchain,” as he explains on his website.
The value of NVT Premium today suggests that bitcoin should be hovering around $43,000. Namely, even above what JP Morgan estimates as a reasonable price for BTC.
In fact, in the middle of last June, Woo himself claimed based on this model that bitcoin was “at a discount”. Coincidentally, the percentage under price was around 30% under, as JP Morgan now estimates. A few months after that estimate from Woo, BTC set its all-time high of $69,000, in effect today.