Heading into 2022, cryptocurrencies fell sharply in 2022 as investors abandoned riskier investments. But JPMorgan said it generally sees “upside” in bitcoin and crypto markets following the sell-off, making digital assets the preferred alternative investment. JPMorgan said it sees bitcoin’s fair price at 28 percent above current levels, adding that it sees an opportunity in the crypto market.
The bank said in a Wednesday report that cryptocurrencies have replaced real estate as one of its preferred “alternative assets” — assets that do not fall into specific categories like stocks and bonds. It said it stands by its view that $38,000 is the fair value of Bitcoin. The figure is up 28% from Bitcoin’s $29,722 level on Wednesday morning.
The bank’s strategists, including Nikolaos Panigirtzoglu, noted: “Last month’s crypto market correction was similar to the relative capitulation in January/February last year, and looking ahead, we see a more general upward trend in bitcoin and crypto markets.”
JPMorgan said the sell-off has hurt cryptocurrencies more than other alternative investments such as private equity, private debt and real estate. This suggests that the cryptocurrency has more room to rally, strategists said in the report.
Moreover, for the current market, analysts at JPMorgan said that a long winter can be avoided as long as venture capital funds continue to pour into the cryptocurrency market.
The investment bank wrote that despite the fall of the most prominent algorithmic stablecoins in cryptocurrencies, VC money continues to pour into the cryptocurrency market, and as long as this continues to happen, the future looks bright. So far, there’s been little evidence that venture capital funding dried up after Terra’s collapse. The report also stated that Terra’s collapse had limited ripple effects on the rest of the DeFi ecosystem.
Our guess is that VC funding will continue and a long winter similar to 2018/2019 will be avoided, however, if this funding dries up, a long winter could come.