Daily Management Review

JPMorgan economists predict a possible Bitcoin collapse


JPMorgan noted that the actual price of Bitcoin significantly exceeded its “production price”. In 2017, this phenomenon was followed by a collapse.

The price of Bitcoin jumped higher than its intrinsic value, and this is reminiscent of 2017, when a leap was followed by a collapse, Bloomberg said referring to opinion of JPMorgan bank economists.

Economists have come to this conclusion by presenting cryptocurrency as a commodity and having calculated the “production cost” of one Bitcoin - the cost of computing power, equipment, and spent electricity.

“Over the past few days, the actual price [of Bitcoin] has significantly exceeded marginal costs,” said the economists. “This discrepancy between actual and intrinsic value somewhat reminds of the price jump in 2017. Then the discrepancy disappeared, because the actual price has decreased. ”

JPMorgan noted that there is no consensus on how important an indicator is the dynamics of actual and intrinsic value. “Of course, the views vary. Some researchers believe that the definition of intrinsic value is not fundamental. Others believe that such a fair value is much more important than the market value,” the bank economists write.

Bitcoin price reached its highest point in December 2017 - then it cost more than $ 19,000. In the first quarter of 2019, the price was less than $ 4,000. The cryptocurrency began to grow again in April, when its value exceeded $ 5000. Over the past month, Bitcoin has risen in price by about 50%.

source: bloomberg.com