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True to their habit, JPMorgan's strategists warned Bitcoin investors, despite the current bull market. According to a recent note from investors, Bitcoin has exceeded its "intrinsic value", reflecting the explosion of 2017, before the fall of 2018.
Naturally, JPMorgan wants to rain on the Bitcoin parade
Bitcoin price 00 has suffered a heroic charge since early April, marking the end of the crypto-winter of nearly 18 months. However, JPMorgan's phobic strategists for BTC will always find a reason to dissuade interested customers from buying.
For JPMorgan, cryptocurrency price gains only mean one thing: overvaluation of assets. In order to give FUD a scientific air, it is even able to quantify the "intrinsic price" which, according to JPMorgan, stems from the treatment of bitcoin as a commodity and the calculation of its "cost of production".
According to the strategists:
Over the past few days, the real price has changed significantly from the marginal cost. This divergence between actual values and intrinsic values leads to some higher outbreak echoes by the end of 2017 and, at the time, this divergence was mainly resolved by a reduction in real prices.
Of course, JPMorgan omits that Bitcoin does not behave like a commodity, because its offer is not only limited, but its production is predictable and constant, whatever the market demand.
Between the doldrums and the rally, there was surely a signal to buy?
Not something JPMorgan could recognize. Although logically, yes, there must have been a moment when Bitcoin was a purchase. It seems that JPMorgan's experts have missed that.
In fact, they sang exactly the same song in February, when BTC was around $ 4,000. At that time, JPMorgan's "intrinsic value" was only $ 2,400, based on the "average cash cost of a low cost Chinese miner".
However, all that is really presented here is an overview of the profit margins of the miners.
Previously, JPMorgan members were adamant that Bitcoin had no "intrinsic value", except perhaps in a future dystopian scenario.
"It's nice to see that JPM finally admits that Bitcoin has intrinsic value," commented Mati Greenspan, Senior Market Analyst at EToro. "Now, wait until they understand that miners who have a surplus tend to start accumulating money."
JPMorgan Disclaimer: We do not really know anything
Many members of the mining community have argued that the very concept of "marginal cost" or "breakeven" is flawed. With a limited offer, minors can receive only a larger share compared to other minors.
JPMorgan mentions the "challenge" of defining a "fair value" for BTC, taking into account the remark of its strategist.
Defining an intrinsic or just value for any cryptocurrency is clearly a challenge. Indeed, some researchers say that it has no fundamental value and others believe that fair values far exceed current prices.
So … "Based on our assessment, certainly somewhat arbitrary, do not buy bitcoin." Is this what happens for professional financial advice these days?
Do you agree with JPMorgan's assessment of the current value of Bitcoin? Share your thoughts below!
Images via Shutterstock, JPMorgan / Bitfinfocharts.com
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