Liam Frost · 2 days ago · 2 min read
The world’s largest cryptocurrency has surged beyond its “intrinsic value,” mirroring a similar move in 2017 which preceded the industry’s biggest slump, JPMorgan Chase strategists wrote in a note on Friday.
Chief strategists at JPMorgan say Bitcoin’s overpriced
Bitcoin’s latest rally caught many by surprise, not to say that it wasn’t a welcome development in the crypto community. With the value per BTC exceeding $8,200 at one point, many saw this as an indicator that the dreaded bear market is finally over.
The incredible price jump didn’t go unnoticed by JPMorgan, the US banking giant and previously one of Bitcoin’s most vocal critics. According to a note obtained by Bloomberg, strategists at JPMorgan believe that the world’s largest cryptocurrency might have gotten ahead of itself with its recent rally.
Nikolaos Panigirtzoglou, one of the authors of the note, said that Bitcoin has surged beyond its “intrinsic value.”
The note explained that the intrinsic value of Bitcoin was decided by treating the cryptocurrency as a commodity and then calculating its “cost of production.” Inputs such as estimated computational power, electricity expense, and hardware energy efficiency were used to calculate the total “intrinsic value.”
“Defining an intrinsic or fair value for any cryptocurrency is clearly challenging,” the strategists wrote as a caveat. “Indeed, views range from some researchers arguing that it has no fundamental value, to others estimating fair values well in excess of current prices.”
JPMorgan’s note seen as a major win for the crypto industry
Jamie Dimon, the CEO of JPMorgan, is infamous for his criticism of Bitcoin.
Dimon gained notoriety in the crypto industry in 2017 when he called Bitcoin a fraud and “worse than tulip bulbs, later threatening to fire any of the bank’s employees caught trading cryptocurrencies.
And while Dimon later regretted calling Bitcoin a fraud, he maintained his position that it is essentially worthless. However, JPMorgan’s latest report contradicts the bank’s overall position on cryptocurrencies, as it essentially acknowledges Bitcoin’s value.
JP Morgan is now putting out reports about “Bitcoin’s intrinsic value.”
Thought it was worthless and had no value according to Jamie Dimon??
Never listen to what a bank says.
Watch what they do.
— Pomp 🌪 (@APompliano) May 20, 2019
While many laughed off JPMorgan’s report as being ridiculous, others have seen it as being very dangerous for the market. Responding to Pompliano’s tweet, many users called out JPMorgan for trying to devalue Bitcoin in order to hoard the coins.