Crypto Could Be Heading For an Inevitable Price Regression

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.

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