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JPMorgan also sees a long-term potential Bitcoin price of $140,000 as a long-term theoretical goal.
JPMorgan Chase analysts suggested that major institutional buyers are now abandoning Bitcoin (BTC) in favour of gold, while the cryptocurrency hit a five-month low near $30,000 this week.
JPMorgan indicated in a client note on Tuesday that institutional investors are returning to gold, reversing a big bullish cryptocurrency market activity that pushed Bitcoin’s price past $64,000 in mid-April.
The American megabank said, citing open interest details in Bitcoin futures contracts on the Chicago Mercantile Exchange, that BTC futures have now seen the first significant downturn since the bull market began in late 2020:
“The bitcoin flow picture continues to deteriorate and is pointing to continued retrenchment by institutional investors. Over the past month, bitcoin futures markets experienced their steepest and more sustained liquidation since the bitcoin ascent started last October.”
Despite pointing out gold’s recent trend reversal over Bitcoin, JPMorgan retains its previous prediction that Bitcoin would reach $140,000 in the long run. “This $140,000 price should be thought of as a long-term theoretical target assuming a convergence of bitcoin volatility to that of gold and an equalisation of bitcoin allocations to that of gold in investor portfolios,” according to the latest investor note.
According to JPMorgan, the actual fair valuation of Bitcoin dependent on a volatility ratio of Bitcoin to gold is one-quarter of a million dollars, or $35,000.
JPMorgan analysts predicted in January that Bitcoin could become a convincing alternative to gold and reach $146,000 in the long run. “A convergence in volatility between Bitcoin and gold is unlikely to occur quickly and, in our opinion, is a multiyear process,” JPMorgan said.
The world’s largest JPMorgan’s comments came as Bitcoin is suffering one of the wildest intraday price drops in history, slipping from an intraday peak of above $43,000 to below the $32,000 mark. Since then, the world’s largest cryptocurrency has recovered slightly, standing at $37,137 at the time of publishing, down about 16 percent in the previous 24 hours. Despite the market’s ongoing bloodbath, BTC is already up nearly 300 percent over the last year, traded at mid-January highs.