Bitcoin's biggest challenge is its volatility and boom-bust cycles that make institutional adoption difficult, JPMorgan said in a research report.
- The bank's estimate of bitcoin's fair value — based on bitcoin's volatility ratio to gold — fell to about four times, or $38, analysts led by Nikolaos Panigirtzoglou wrote in the released note. the week pasada.
- JPMorgan said its earlier predictions that the bitcoin-to-gold ratio would roughly double now seemed unrealistic. The bank sees significant headwinds for Bitcoin and Ethereum going forward.
- The challenge for Ethereum is different from Bitcoin, as it derives most of its value as a "decentralized application currency rather than a form of digital gold," he said.
- Ethereum faces challenges due to declining market share in decentralized finance (DeFi) and non-fungible tokens (NFT), the bank said. During this month's correction, Ether failed to regain market share from its major competitors, with Ether prices falling by a similar magnitude against smaller altcoins, the bank added.
- Similar to last May, the liquidation of leveraged futures has played a significant role in the crypto market's correction in recent weeks, the bank said, but this month's liquidation of positions appears less severe.
- Bitcoin was trading around €37,244 at press time.
Read More: Morgan Stanley Says Bitcoin's 50% Correction Is Nothing New