Save for Friday’s sudden selloff, has been on an absolute tear over the past few weeks. Since early-April, the asset has moved from $4,200 to a recent peak of $8,350 — effectively a gain of 100% — and is seemingly preparing itself for another leg higher.
While many believe that this move comes off the back of booming on-chain statistics and strong fundamental developments, one Wall Street firm argues that this isn’t the case.
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bitcoin Diverging From Intrinsic Value
In a recent research note from JP Morgan, obtained by Holger Zschaepitz, a German economist and author, it was explained that is above its “intrinsic value”. The note (seen below) suggests that the ’s “intrinsic value” is the estimated cost of production per unit or costs. In fact, JP Morgan’s estimates show that is currently (as of May ~15th) above its breakeven cost by two times.
prices diverge from intrinsic value, carrying echoes of late 2017, JPM says.
— Holger Zschaepitz (@Schuldensuehner)
Zschaepitz adds that JP Morgan notes that this current rally “carries echoes of late-2017”, which was when spectacularly rallied and decoupled from any fundamentals on the back of hype.
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Indeed, Fundstrat’s Tom Lee claims that historically trades at around two times its intrinsic value, especially in bull markets.
It is important to note that JP Morgan has been historically bearish on . As NewsBTC , analysts from the American bank suggested that may only be a good hedge in a “dystopian scenario”, not a digital gold as some expect. They go on to state that could plunge to $1,260 eventually. And, of course, JP Morgan’s impassioned chief executive, Jamie Dimon, has been enamored with and a similar ilk of insults.
Yet Fundamentals Are Better
Is JP Morgan right in its assumption that is too far above its intrinsic value?
Well, maybe not. As Dan Held, the co-founder of Interchange, recently pointed out, the ecosystem’s fundamentals and infrastructure are much stronger now than in 2017 or 2018, sans costs.
Case in point, the industry has some of the biggest names in finance and technology delving in. Square, through its Cash App and chief executive Jack Dorsey; Fidelity Investments; E*Trade, Bakkt, and ErisX are among the developments in the space that make this rally entirely different than anything before it. Thus, some deem it logical that warnings of a large market correction can be deemed moot.
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Published at Sat, 18 May 2019 22:41:56 +0000
