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JP Morgan Analysts: Bitcoin Price May Be Beyond “Fair Value” in Uptrend

After bitcoin’s recent bullish steam in recent weeks, analysts at JP Morgan, the world’s sixth largest bank, think the bitcoin price appears overextended and could be in for another correction.

That’s per a note created by Nikolaos Panigirtzoglou and other analysts analysts at the firm. The document was first circulated on May 17th, the morning after the bitcoin price fell from $7,800 USD to $7,100.

JPM Coin

In the ensuing days, BTC has gained that ground back and is currently trading over $7,800 again. Yet even with the genesis cryptocurrency’s reconsolidation after its weekend dip, Morgan’s analysts think the coin’s price may currently be beyond its fair value.

The firm’s experts arrived at that estimation by calculating the average costs associated with mining and then compared that sum to the bitcoin price. To that end, Panigirtzoglou and his peers wrote the recent uptrend was reminiscent of a period during bitcoin’s last bull run:

“Over the past few days, the actual price has moved sharply over marginal cost. This divergence between actual and intrinsic values carries some echoes of the spike higher in late 2017, and at the time this divergence was resolved mostly by a reduction in actual prices.”

Of course, even if a correction is near, it could end up being just the latest blip in an indefinite series of cycles. Back in February before BTC started its latest run, Panigirtzoglou projected “more participation” from institutions would be coming to the crypteconomy:

“The stability that we are seeing right now in the cryptocurrency market is setting the stage for more participation by institutional investors in the future. The cryptocurrency market was a new market. It went through a bubble phase, the burst.”

So while it remains to be seen where the bitcoin price will go in the short-term, there’s still plenty of room for growth as enterprises continue to come marching into the cryptocurrency ecosystem.

Bitcoin Still Sitting Pretty So Far in 2019

Since the beginning of the year, the bitcoin price has outperformed the S&P 500, the NASDAQ 100, gold, and other popular mainstream investments — not bad for a digital coin that was worth less than one penny a decade ago.

With renewed buy pressure returning after the dissipation of the 2018 bear market’s pessimistic atmosphere, bitcoin is now hovering around $7,815. That price puts BTC up 48 percent on the month and up 101 percent over the last three months.

Notably, the bitcoin price has now registered three straight weeks of double-digit percentage rises — a performance the OG cryptocurrency hasn’t put on since 2017, when its price briefly ripped up to $20,000.

Of course, it’s an open question whether or not the crypto can match or surpass that valuation in another full-fledged cryptoeconomy bull run. But what’s clear already is that bitcoin’s recent uptrend has also helped spur buy pressure around the top cryptocurrencies in general.

For example, last week popular U.S. crypto exchange Coinbase facilitated more than $904 million worth of ether (ETH) trades, a record for the platform. The second-largest crypto per market capitalization is up 70 percent since three months ago.

Up or Down, JP Morgan’s Crypto Activities Grow

Blockchain developers at JP Morgan have been increasingly busy in recent times.

Back in February, it was revealed that the bank was launching JPM Coin, a stablecoin-like token that the firm was going to test out in payments trials at some point in 2019. The token is being built atop Quorum, which is JP Morgan’s in-house permissioned fork of Ethereum.

A few weeks later, the bank also revealed that its 200-member Interbank Information Network — also built on Quorum — was launching settlement functionalites, making the project a de facto Ripple competitor.

Moreover, as of this month, enterprises can now build applications for themselves via Quorum using Microsoft’s Azure Blockchain Service.


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