Here’s how much bitcoin is worth, says JPMorgan, as crypto faces this summer headwind
Stocks are expected to continue to rise on Thursday as markets relax on inflation risks and the exact details of what comes from the US Federal Reserve.
The cryptocurrency market is down significantly on the week, having lost $ 1 trillion in market capitalization from its peak of $ 2.5 trillion in early May, said an analyst group led by Nikolaos Panigirtzoglou of the investment bank JPMorgan JPM,
Panigirtzoglou and his team have our call of the day, giving bitcoin a fair value of $ 23,000 to $ 35,000 over the medium term, depending on the relationship between its volatility and that of gold, as the crypto faces new headwinds.
According to the investment banking team, the signal for the latest major challenge facing bitcoin is that the discount on the net asset value of the largest bitcoin fund – the Grayscale Bitcoin Trust – has extended deeply into negative territory. .
This reflects the early sale of shares of the trust in the secondary market at the end of the lock-in period for investors.
“As the six-month lock-in period expires in June and July, these investors are likely to sell at least some of their GBTC shares by putting downward pressure on GBTC prices and more generally on the bitcoin markets.” , analysts said.
More generally, recent volatility and the boom and bust dynamics of crypto represent a barrier to the adoption of crypto markets by institutional investors, Panigirtzoglou and his team said.
“The mere increase in volatility, especially against gold, is a barrier to further institutional adoption because it reduces the attractiveness of digital gold over traditional gold in institutional portfolios,” analysts said.
Starting from the idea that institutional investors take into account the volatility of assets in the allocation of capital, Panigirtzoglou and his team use a bitcoin / gold volatility ratio to assess the valuation of the crypto asset.
JPMorgan considers bitcoin to have a theoretical target price of $ 140,000, based on the convergence of bitcoin’s volatility with GC00 gold,
volatility and equalization of bitcoin and gold allocations in investor portfolios.
But bitcoin is poised to be six times more volatile than gold, giving it a fair value of one-sixth of $ 140,000, or $ 23,000.
“The best we can hope for in the medium term is that this volatility ratio will partially return from around x6 currently to around x4 by the end of the year,” JPMorgan analysts said. The fair value of bitcoin at four times the volatility of gold is $ 35,000.
“Needless to say, a convergence or full equalization of volatilities or allocations is unlikely for the foreseeable future,” said Panigirtzoglou and his team.
What is the relationship between bitcoin and stocks?
Michael Batnick of financial blog Irrelevant Investor said he thought it was no coincidence that people were selling everything at the same time in 2020 – stocks, bonds, gold and crypto – but don’t bet on a crypto crash in destroying stocks. .
Our chart of the day, courtesy of Batnick, shows the correlation between bitcoin and the S&P 500 SPX,
“Sometimes when people talk about uncorrelated assets, what they really want are negatively correlated assets. Such a strategy is hard to come by, ”Batnick said. “With uncorrelated assets, you have to take the bad with the good.”
“Sometimes bitcoin moves with the stock market, and sometimes it doesn’t.”
Elon Musk said he will seek to launch the Starlink satellite internet business once his earnings become predictable, probably in a few years. Reply to a user on Twitter TWTR,
the billionaire CEO of electric car maker Tesla TSLA,
said that “going public sooner than it would be very painful,” noting that he would do his best to give preference to Tesla’s long-term shareholders in an initial public offering.
On the US economic front, investors can expect initial jobless claims for the past week at 8:30 am Eastern time. It is expected that 380,000 Americans filed for unemployment last week. Continued jobless claims for the week of June 12, durable goods orders for May, non-defense non-aircraft capital goods orders for May and a first quarter gross domestic product revision are due at the same time.
Shares of data management firm Confluent are expected to begin trading on the Nasdaq, after the Mountain View, Calif.-Based group valued its IPO well above its forecast range on Wednesday night. Confluent valued its shares at $ 36 each, above the $ 29- $ 33 range estimated by the company last week.
Financial services company Visa has bought fintech group Tink, an open banking platform, for 1.8 billion euros ($ 2.15 billion) from Swedish bank SEB.
John McAfee, the maverick software pioneer who created the antivirus software that bore his name, was found dead in his Spanish jail cell on Wednesday in an apparent suicide. His death came hours after a court approved his extradition to the United States to face tax charges, which may have sentenced him to decades in prison.
US stock market futures point to the YM00,
should behave similarly to European SXXP stocks,
and actions in Asia NIK,
who were firmly in the green.
Battle for birdsong: a dispute between two neighbors in the outskirts of England over birds in a tree straddling their property finished by cutting the tree in half.
Dirty clothes on the moon: Astronauts don’t do laundry in space – they wear clothes until they can no longer bear the smell, then eject them to burn them in the atmosphere. NASA and detergent maker Tide have teamed up to change that.
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