JPMorgan picks out crypto as the preferred alternative asset

JPMorgan picks out crypto as the preferred alternative asset

By Sam Grant - min read
  • JPMorgan analysts chose Bitcoin over real estate, adding that the former’s fair value is 30% above current prices 
  • They also observed that VC funding should turn the current bear market and prevent a crypto winter akin to 2018/2019

JPMorgan analysts led by Nikolaos Panigirtzoglou have opined on the current crypto market, finding that the fair price of the world’s leading digital asset, Bitcoin, is 30% higher than current prices. The bank’s analysts said that there’s significant potential that Bitcoin could rise to $38,000 and carry other crypto tokens along with it, despite recent market capitulation.

The past month’s crypto market correction looks more like capitulation relative to last January/February, and going forward, we see upside for Bitcoin and crypto markets more generally,” the strategists said.

In the note sent to clients on Wednesday, the analysts maintained the prediction they had issued last February when they highlighted $38,000 as Bitcoin’s fair value. The approximation was 12% lower than the actual price of Bitcoin at the time, and the figure was achieved considering BTC volatility at a magnitude four times that of gold.

The JPMorgan strategists chose crypto as a preferred alternative asset for investment. They explained that other alternative asset classes, including private debt, private equity, and real estate, were all struck out for potential lagged repricing.

“A potential lagged repricing keeps us more cautious on private equity, private debt and real estate over the coming quarters. We thus replace real estate with digital assets as our preferred alternative asset class along with hedge funds,” they added.

Venture funding to avert a possible winter

The bullish prediction on Bitcoin and other cryptocurrencies by JPMorgan comes at a time when the market is suffering from various ‘attack events’ starting from Russia’s invasion of Ukraine to the US Federal Reserve’s efforts toward slashing the high inflation levels.

Terra’s recent downfall, along with its native LUNA and UST tokens, also shook the markets. Nonetheless, investor conviction remains high despite all that. Panigirtzoglou and company noted that investment should continue and this will help avoid a market scenario similar to that of 2018/2019 extended crypto winter.

“Thus far there is little evidence of VC funding drying up post-Terra’s collapse. Of the $25 billion VC funding year-to-date, almost $4 billion came after Terra,” the investor note read. “Our best guess is the VC funding will continue and a long winter similar to 2018/2019 would be averted.”