While it is still too early to say definitively whether the crypto markets have hit bottom, there are some signs that point to a bottoming process underway.
First, the sell-off has been driven primarily by retail investors liquidating their positions, suggesting that much of the “fear of missing out” (FOMO) factor has been exhausted.
Second, institutional investor interest in cryptocurrencies remains high, with major players like VC firm Andreessen Horowitz disclosing last week the launch of a new $4.5 billion fund for crypto products.
Third, and perhaps more importantly, on Wednesday, May 25, JP Morgan (NYSE:JPM) analyst Nikolaos Panigirtzoglou wrote in a note to clients that Bitcoin has “significant upside potential” and that its fair value is $38,000, a figure that would represent a 30% increase from its current price.
“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 analyst wrote.
While maintaining his estimate of BTC’s fair value at $38K, Panigirtzoglou also reiterated JPM’s assessment back in February when the apex crypto asset was changing hands above the $43,000 level.
JPMorgan’s confidence in Bitcoin was also expressed in the way how they now see cryptocurrencies and hedge funds- which is as their “preferred” alternative asset classes. Meanwhile, the real estate sector seems to be taking a back seat in their books as mortgage rates soar.
The shift in thinking comes as the bank’s asset management arm seeks to boost returns for clients. JPMorgan is not alone in seeing potential in digital assets; Goldman Sachs (NYSE:GS) has also been exploring ways to increase its presence in the market.
However, the move by JPMorgan is notable given not only its size as a bank, but also its history of being cautious about new asset classes. In fact, CEO Jamie Dimon is a well known crypto critic. Back in 2017, he called Bitcoin a “fraud,” “worse than tulip bulbs” and a bubble that “won’t end well.” Dimon also called BTC “worthless” in October 2021.
Still, early this year, Dimon’s tone on crypto changed somewhat. In a letter to shareholders he praised blockchain technology- writing that “decentralized finance (DeFI) and blockchain are real, new technologies that can be deployed in both a public and private fashion.”
While some may be skeptical of JP Morgan’s assessment, the fact that they are still bullish on the asset despite its recent price slump is a good sign for Bitcoin’s long-term prospects.
BTC was last changing hands at $29.347, up 1.56% in the last 24 hours. The native token of the Bitcoin blockchain has a total market cap of $560 billion.
Disclaimer: This article is provided for informational purposes only. It is not intended to be used as investment or financial advice
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