JP Morgan loses optimism about the price of bitcoin and explains why

Key facts:

For JP Morgan, the high volatility of bitcoin threatens its institutional adoption.
According to the company, there are chances that the bearish scenario for the price of BTC will continue.

The investment company JP Morgan had previously said that USD 150,000 seemed a reasonable price for each bitcoin (BTC) due to the increase in institutional adoption. Now the US bank has changed its mind and considers that figure unlikely.

“Our fair value for bitcoin, based on a bitcoin to gold volatility ratio of around 4x, would be a quarter of $150,000, or $38,000,” the company explains, according to Business Insider review.

At the time of writing this article, it can be seen in the CriptoNoticias Price Calculator that each BTC is trading at USD 38,340. In other words, the crypto asset is at its fair price, according to JP Morgan’s analysis.

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Evidently, the investment company is no longer so optimistic when it comes to institutional adoption of bitcoin. The reason, he explains, is the high volatility of the cryptocurrency. BTC is 44% away from reaching its all-time high near $70,000, which he arrived last November.

It is curious —and, perhaps, not very credible— the reason given for this change of opinion when it is known that bitcoin is a highly volatile asset. That’s nothing new. On the contrary, it is something that both JP Morgan and institutional investors who decided to put part of their reserves into cryptocurrency are aware of.

Anyway, volatility is the only argument presented for the loss of optimism about the price of BTC: “This kind of volatility will hinder further adoption by institutions.”

JP Morgan has not only lowered its expectations on the price, but also says that the bearish scenario is likely to continue. This would be due to the fact that massive sales of BTC at a loss by investors, also known as “capitulations”, have not yet been observed:

“Open interest in futures contracts, and the amount of bitcoin or ether held on exchanges, point to a sharp or less panicked reduction in positions than last May, particularly with respect to larger investors. In turn, this implies that this month’s corrections look less like a capitulation relative to last May.”

J. P Morgan, an American investment company.

MicroStrategy, Tesla and Marathon lead institutional investment in bitcoin

From left to right: company name, country acronym, amount of BTC they hold, and what percentage of the BTC supply that number represents. Fountain: bitcointreasuries.

The institutional investors that have the most bitcoin are MicroStrategy, Tesla, Marathon, Square, Hut8, Coinbase and Riot Blockchain. It is worth clarifying that these are public companies (that is, they are listed on the stock exchange) so their balance sheets are also public. There may be other organizations that are also hodlers of bitcoin —even to a greater extent than those mentioned here— but to keep a secret about their holdings.

As reported by the CEOs of these companies, their investment in BTC is long-term. This suggests that they would not sell their holdings due to falling prices. In addition, the possibility of acquiring bitcoin “at a discount” at low prices could attract new large investors. An example of this is MicroStrategy, which has bought BTC at different prices and taken advantage of the recent drop to acquire more.