Analysts at investment bank JPMorgan have downgraded Bitcoin's fair valuation from $150,000 to $38,000 due to high volatility limiting institutional adoption of the crypto, Business Insider has reported.
According to the bank's experts, the current 50% pullback from the crypto’s November all-time high highlights the nature of the boom-and-bust cycle, which is an obstacle for institutions to add the cryptocurrency to their portfolios. According to the report:
"Our previous projection that the Bitcoin to gold volatility ratio will fall to around 2x later this year seems unrealistic. Our fair value for bitcoin based on a volatility ratio of Bitcoin to gold of around 4x would be 1/4th of $150,000, or $38,000."
JPMorgan's model assumes the convergence of Bitcoin volatility with gold volatility and the alignment of its share in investors' portfolios.
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Notably, the bank has not ruled out Bitcoin falling even further amid signs of capitulation by buyers. According to JPMorgan analysts:
"The open interest across futures contracts and the amount of bitcoin or ether held on exchanges, are pointing to less panicky or abrupt unwinding of positions than last May in particular with respect to larger crypto investors."