The price of bitcoin now is too high compared to its production cost and its volatility-adjusted comparison to gold, JPMorgan’s experts think.
Bear force
Any recovery in cryptocurrency markets soon will probably be short-lived and not the start of a long-term uptrend, says a JPMorgan research report from last week.
The bank’s analysts shared that bitcoin’s current price is simply too high when compared to its production cost of $43,000 and its volatility-adjusted comparison to gold, which is $53,000.
At the time of the report, bitcoin was trading around $67,000.
Things are slowing down
JPMorgan observes that momentum in bitcoin futures is also weak, likely due to BTC liquidations by creditors of Gemini, Mt. Gox, and the German government.
The report expects these liquidations to decrease this month and predicts a rebound in Chicago Mercantile Exchange bitcoin futures positioning into August.
Both bitcoin and gold are expected to benefit from a higher chance of a Trump election win.
Some investors see a second Trump presidency as much more favorable to crypto companies and regulations, unlike the current Biden administration, according to analysts led by Nikolaos Panigirtzoglou.
Summer of fireworks or summer of calm?
There is speculation that Trump might even announce bitcoin as a strategic reserve assetfor the US at the Nashville Bitcoin conference later this week, which could lead to a huge increase in bitcoin’s price, says Markus Thielen, founder of 10x Research.
Summer is usually a quiet time for the markets, including stocks and crypto, as many traders and investors are on vacation, often delaying major decisions until autumn.
But worth to mention crypto markets are unique in this case, because they operate 24/7, every day of the year, and often without any regulatory interference, unlike traditional markets.
