Leading investment bank JPMorgan has changed its mind on the long-term bitcoin price estimate. The institution had estimated a long-term price of $146,000 in November as bitcoin surged above $60,000. One of the most important reasons for this change has to do with the increased volatility the asset has been facing lately.
JPMorgan changes long-term bitcoin price estimate
JPMorgan, one of the largest financial institutions in the world, has dramatically changed its mind about the price bitcoin will reach in the long term. While JPMorgan was bullish last year when it pegged the figure at nearly $150,000, it has revised its estimate down due to the market situation this year.
The new price of $38,000, about a quarter of the number previously calculated, was estimated in a different context regarding gold and bitcoin and market volatility. Regarding this, JPMorgan said in a note:
Our previous projection that bitcoin’s volatility ratio to gold will drop to around 2x later this year seems unrealistic. Our fair value for bitcoin based on a bitcoin to gold volatility ratio of approximately 4x would be 1/4 of $150,000, or $38,000.
Increased volatility hurts institutional adoption
Another factor that JPMorgan looked at is the volatility that bitcoin and the crypto market as a whole have experienced. This, according to the bank, makes it difficult for institutions to bet on bitcoin for reasons other than being a speculative asset.
The note concluded:
The biggest challenge for bitcoin going forward is its volatility and the boom and bust cycles that hinder institutional adoption.
The recent fall in cryptocurrency prices has been attributed to several factors, and some have considered recent Federal Reserve announcements to affect crypto markets, which have shown a correlation with other markets like the S&P500. One such person was Arthur Hayes, who in a recent summary titled “Circo Loco” recommended a “wait and see” approach for investors wanting to enter the cryptocurrency market.
In addition, a report by Huobi titled “Taper Landed” released in December, explained that the upcoming reduction will affect the growth of the cryptocurrency market. JPMorgan thinks the market could go down further, as it also found no signs of capitulation in recent market moves.
What do you think of JPMorgan’s lower expectations for bitcoin? Tell us in the comments section below.
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