News
Is an inevitable price regression looming?
4pm ▪ 3 minute read ▪ by Luc Jose A.
As the cryptocurrency market goes through a period of fluctuating valuations, JPMorgan analysts provide key insights into the sustainability of this recovery. In a recent report, they expressed skepticism about the durability of the current rebounds, particularly for bitcoin.
A strategic rather than sustainable recovery
According to JPMorgan analysts, the current rebound in cryptocurrency prices, especially BTCseems more tactical than indicative of a sustained uptrend. Bitcoin is currently trading around $67,500. Analysts esteem that the value of this BTC is well above the estimated production cost of $43,000.
They also use a special method to compare the price of cryptocurrencies with that of gold. In fact, they adjust the prices taking into account the volatility, that is, the price fluctuations of both assets. According to their calculations, the price of gold, considering its volatility, would be about $53,000. They explain that the current price of bitcoin is quite high compared to this value, suggesting a regression towards this mean.
In other words, in the long run, big jumps in BTC price could be limited. The cryptocurrency would tend to stabilize around this comparison with gold, adjusted for volatility, they say.
Impact of Liquidations and Political Outlook on Markets
Analysts note that bitcoin futures have recently been weakened by significant liquidations, particularly by creditors of Gemini and Mt. Gox, as well as the sale of bitcoin seized by the German government. These factors are temporary, they say, and they expect these futures contracts to recover by August.
They also believe that Donald Trump’s potential return to the presidency could benefit cryptocurrencies and gold. Trump is seen as more favorable to the cryptocurrency sector than the current Biden administration.
Trump’s prospective trade policies could also encourage central banks in emerging markets to further diversify their gold holdings. These political and economic developments could significantly reshape future market trends.
In short, the immediate outlook for BTC and other cryptocurrencies look promising. However, an overly optimistic interpretation of current trends would be harmful. Analysts therefore recommend greater vigilance on the part of investors.
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Luke Jose A.
A graduate of Sciences Po Toulouse and holder of a blockchain consultant certification issued by Alyra, I joined the Cointribune adventure in 2019. Convinced of the potential of blockchain to transform many sectors of the economy, I am committed to raising awareness and informing the general public about this ever-evolving ecosystem. My goal is to enable everyone to better understand blockchain and seize the opportunities it offers. Every day, I strive to provide an objective analysis of the news, decipher market trends, convey the latest technological innovations and put into perspective the economic and social issues of this ongoing revolution.
DISCLAIMER
The views, thoughts and opinions expressed in this article are solely those of the author and should not be construed as investment advice. Do your own research before making any investment decisions.