Bitcoin and cryptocurrencies have had a rough time over the past few weeks, with the bitcoin price swinging at a sharp clip.
Bitcoin dropped to as low as $28,600 per bitcoin on the Luxembourg-based Bitstamp exchange this week before rebounding more than $30,000 — the equivalent of $6,000 in a matter of hours. Meanwhile, the top ten cryptocurrencies such as BNB, cardano, dogecoin and Ripple’s XRP have also fallen sharply, eliminating hundreds of billions of cryptocurrencies from the $1.4 trillion combined crypto market.
Now, after correctly calling the latest bitcoin and cryptocurrency selloff, analysts at Wall Street giant JP Morgan have predicted that the price of bitcoin is likely to fall in the medium term.
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“Price will continue to fall to the $25,000 level before long-term momentum signals a capitulation,” JPMorgan strategists led by Nikolaos Panegirzoglu wrote in a note first published. Bloomberg, giving bitcoin a fair value of between $23,000 and $35,000 over the medium term, based on comparing its volatility against gold.
While JPMorgan has given a theoretical bitcoin target price of $140,000, based on the affinity of bitcoin’s volatility to gold, bitcoin fluctuates six times that of gold, giving it a fair value of one-sixth of $140,000, or $23,000.
“Despite this week’s correction, we are reluctant to let go of our negative outlook for the bitcoin and crypto markets in general,” the analysts wrote, adding that while there was “some improvement, our signals generally remain bearish.”
Bitcoin has long been the main driver of the cryptocurrency market, with almost all tokens, including Ethereum, Binance’s BNB, cardano, dogecoin, and Ripple’s XRP, tracking bitcoin’s price movements.
While Ethereum, the second largest cryptocurrency after Bitcoin, has outperformed Bitcoin over the past year, the price of Ethereum has fallen along with Bitcoin this week as China moves to crack down on crypto miners – who use massive amounts of electricity to secure blockchains and verify Validity of transactions in return to newly generated tokens.
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Meanwhile, the bank’s strategists also warned that the opening of stocks in the Grayscale Bitcoin Trust (GBTC) could become a source of downside risk to the bitcoin price.
“The sell-off of GBTC shares that exited their six-month shutdown during June and July has emerged as additional headwinds for Bitcoin,” JPMorgan analysts wrote. The Grayscale Bitcoin Trust, the largest digital asset fund manager, allows institutional investors to gain exposure to bitcoin through shares in the trust, which currently owns just over 650,000 bitcoins – 3% of the bitcoin supply.