Crypto
Crypto Could Be Heading For an Inevitable Price Regression
Analysts have expressed skepticism about the current crypto price rebound, noting Bitcoin’s trading value is significantly above its estimated production cost of $43,000, thus suggesting a potential price regression towards the volatility-adjusted value of gold at $53,000. On the other hand, political changes, such as a potential Trump presidency, could favorably influence the crypto sector.
![Crypto Could Be Heading For an Inevitable Price Regression](https://born2invest.com/wp-content/uploads/2024/07/arthur-mazi-vFhsyAMbHkE-unsplash.jpg)
As the crypto market experiences a period of fluctuating valuations, JPMorgan analysts provide a crucial perspective on the sustainability of this recovery. In a recent report, they expressed skepticism regarding the durability of the current rebounds, especially for Bitcoin.
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A Strategic Rather Than Durable Crypto Rebound
According to JPMorgan analysts, the current rebound in crypto asset prices, particularly BTC, appears more tactical than indicative of a sustainable bullish trend. Bitcoin is currently trading around $67,500. The analysts believe that this BTC value is well above its estimated production cost of $43,000.
Moreover, they use a special method to compare the price of the crypto asset to that of gold. They adjust prices by considering volatility, meaning the price fluctuations of both assets. According to their calculations, gold, when adjusted for its volatility, would be worth around $53,000. They explain that the current price of Bitcoin is quite high compared to this value. This suggests a regression towards this average.
In other words, in the long term, large jumps in BTC prices could be limited. The crypto asset would tend to stabilize around this gold comparison adjusted for volatility, according to them.
The analysts report that Bitcoin futures contracts have been recently weakened by significant liquidations. Notably, those carried out by the creditors of Gemini and Mt. Gox, as well as the sale of bitcoins seized by the German government. These factors are temporary, according to them. They anticipate a recovery of these futures contracts by August.
Potential Political Influence on Crypto
Additionally, they consider that the potential return of Donald Trump to the presidency could favor crypto assets and gold. Trump is perceived as more favorable than the current Biden administration for the crypto sector.
Trump’s trade policy prospects could also prompt central banks in emerging markets to further diversify their reserves into gold. These political and economic developments could significantly reshape future market trends.
Cautious Optimism for Immediate Prospects
In summary, the immediate prospects for BTC and other cryptocurrencies seem promising. However, an overly optimistic interpretation of current trends would be detrimental. Therefore, the analysts recommend increased vigilance on the part of investors.
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(Featured image by Arthur Mazi via Unsplash)
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First published in CoinTribune. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Born2Invest assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Born2Invest is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us
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