As the crypto market experiences a period of fluctuating valuations, JPMorgan analysts provide a critical perspective on the sustainability of this rally. In a recent report, they expressed skepticism about the sustainability of current rallies, particularly for bitcoin.
A strategic rebound rather than a sustainable one
According to JPMorgan analysts, the current rally in crypto asset prices, particularly BTC, appears more tactical than indicative of a sustainable uptrend. Bitcoin is currently trading around $67,500. The analysts estimate that this value of BTC is well above its estimated production cost of $43,000.
Moreover, they use a special method to compare the price of the crypto asset to that of gold. In fact, they adjust the prices by taking into account the volatility, that is, the price fluctuations of the two assets. According to their calculations, gold, if we take into account its volatility, would be worth about $53,000. They explain that the current price of bitcoin is quite high compared to this value. This suggests a regression towards this average.
In other words, in the long term, big jumps in BTC price could be limited. The crypto asset would tend to stabilize around this comparison with gold adjusted for volatility according to them.
Impact of liquidations and political outlook on markets
Analysts report that bitcoin futures have been weakened recently by significant liquidations, including those by Gemini and Mt. Gox creditors, as well as the sale of bitcoin seized by the German government. These factors are temporary, they say. They expect a recovery in these futures contracts as early as August.
Additionally, they believe that Donald Trump's potential return to the presidency could be a boon to crypto assets and gold, with Trump being seen as more favorable to the crypto sector than the current Biden administration.
The outlook for Trump's trade policy could also prompt emerging market central banks to further diversify their gold holdings. These political and economic developments could significantly reshape future market trends.
Overall, the immediate outlook for BTC and other cryptos looks promising. However, an overly optimistic interpretation of current trends would be detrimental. Analysts therefore recommend increased vigilance on the part of investors.
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