Bitcoin is in the early stages of a price recovery, according to strategists at JPMorgan Chase, who claim that the cryptocurrency has “significant upside potential” following one of the most severe crashes in its history.
The price of bitcoin returned above $30,000 on Monday, marking a 15 per cent increase from the 18-month low it hit in mid May.
In a note to investors last week, JPMorgan strategists wrote that $38,000 currently represented the fair market value for bitcoin – roughly 25 per cent up from today’s price.
“The past month’s crypto market correction looks more like capitulation relative to last January/ February and going forward we see upside for bitcoin and crypto markets more generally,” the note stated.
The researchers at the banking giant also noted that bitcoin and other cryptocurrencies like Ethereum (ETH) and Cardano (ADA) were favoured over tangible assets like real estate.
“We thus replace real estate with digital assets as our preferred alternative asset class along with hedge funds,” the strategists wrote.
The latest forecast comes in contrast to previous statements from JPMorgan CEO Jamie Dimon, who dismissed bitcoin last year by claiming that it has “no intrinsic value” and faces the prospect of being regulated “the hell out of” in the US.
“I’m not a bitcoin supporter. I don’t care about bitcoin. I have no interest in it,” Mr Dimon said during the Wall Street Journal CEO Council summit last May.
“On the other hand, clients are interested, and I don’t tell clients what to do.”
— Dan Held (@danheld) May 29, 2022
More than $1.5 trillion has been wiped from the overall crypto market since it reached record highs last November, with bitcoin alone seeing a drop of more than 60 per cent over the last six months.
The downturn saw a popular crypto market sentiment score fall to its lowest level since 2019, with the Bitcoin Fear & Greed Index registering “extreme fear”.
The index, which measures sentiment using data from cryptocurrency exchanges, social media posts and market momentum, is used by some investors and traders as an indicator of whether to buy, sell or hold.
“Historically, buying into extreme fear levels in bitcoin has been a profitable strategy,” Sam Kopelman, a manager at the cryptocurrency wallet Luno.
“That said, bitcoin has also seen continued sell-offs following a fearful market sentiment. Investors must remember that past performance is not indicative of future price movements. Therefore, as investors begin to re-enter the market, they must remain wary.”