JPMorgan: Bitcoin Set for Another Boom and Bust Cycle
A recent study by JP Morgan reveals that bitcoin’s recent price pump has caused the coin to surpass its intrinsic value. Per a report on Bloomberg, March 20, 2019, the strategists, however, warn that the BTC price surge echoes 2017’s bull rally which saw the market crash afterward.
History Repeating Itself?
U.S. investment banking giant, JPMorgan Chase & Co., have once again voiced opinions concerning the number one cryptocurrency. Recently, JPMorgan strategists, including Nikolas Panigirtzoglou, stated that bitcoin’s recent price pump has managed to push the coin past what they believe to be its intrinsic value.
However, the strategists believe that a price slump is bound to happen, as they noted that BTC’s current price pattern mirrors the 2017 bull rally that heralded a price crash.
The strategists further noted:
“Over the past few days, the actual price has moved sharply over marginal cost. This divergence between actual and intrinsic values carries some echoes of the spike higher in late 2017, and at the time this divergence was resolved mostly by a reduction in actual prices.”
In arriving at bitcoin’s intrinsic value, the strategists evaluated the virtual currency as a commodity, by calculating its cost of production using factors like the cost of electricity, computational power, and hardware energy efficiency.
Morgan Creek co-founder, Anthony Pompliano, however, reacted to JPMorgan’s report via Twitter, stating that banks can never be trusted.
JPMorgan has historically espoused anti-bitcoin sentiments, with CEO Jamie Dimon calling bitcoin worthless back in 2017.
Bitcoin Leading Optimistic Price Models
Negative views from the Wall Street Bank aside, bitcoin lead even the most optimistic price models.
Some analysts earlier predicted a pullback in BTC price trend to around mid $6,000, amid an $8,000 price resistance. There was a price flash crash, however, in the early hours of May 17, where the price of bitcoin fell to $6,100, with allegations of a 5,100 BTC dump on the Bitstamp exchange.
The flash crash has however, not affected BTC’s price, as a cryptocurrency analyst with the Twitter handle @planB, showed via a chart that even at $7,300, BTC will still lead the stock-to-flow (S2F) model by $1,000, which could see bitcoin selling at $1 million per coin.
Bitcoin’s next halving in the year 2020 could see its price take on even a steeper parabolic climb with the potential to reach a fraction of gold’s trillion-dollar market capitalization, going by the S2F model.
The New 1 Percenters
According to a recent post on Reddit, 732,892 bitcoin addresses currently own more than 1 bitcoin. This figure is a tiny fraction of bitcoin owners, meaning there could be the rise of a new class of “one percenters”.
But with this revelation comes the realization that more people are hoarding bitcoin, an analysis shows that 60 percent of all bitcoins have not moved in one year, which means that there is more inflow of BTC to whale wallets than corresponding outflows.