JPMorgan backs bitcoin to rise 28% and says cryptocurrencies are now its preferred alternative asset
JPMorgan has said bitcoin's fair price is 28% higher than its current level, implying "significant upside from here" after a dramatic sell-off in cryptocurrencies.
The bank said in a note on Wednesday that cryptos had overtaken real estate as one of its preferred "alternative assets" — assets that don't fall into typical categories, such as stocks and bonds.
It said it was sticking to its view that $38,000 was a fair price for bitcoin. That figure was 28% higher than bitcoin's $29,722 level on Wednesday morning.
"The past month's crypto market correction looks more like capitulation relative to last January/February and going forward we see upside for bitcoin and crypto markets more generally," the bank's strategists, including Nikolaos Panigirtzoglou, wrote in the note.
Cryptocurrencies have tumbled in 2022 as rising inflation and interest rates, the war in Ukraine, and a slowdown in China have caused investors to ditch assets deemed to be risky.
Bitcoin is down about 37% for the year, while ethereum has tumbled about 48%. The total market value of all cryptocurrencies has plunged from about $3 trillion in November to $1.3 trillion in May.
But JPMorgan said the sell-off had hurt cryptocurrencies more than other alternative investments, such as private equity, private debt, and real estate. That suggests there's more room for cryptos to rebound, strategists said in the note.
"We thus replace real estate with digital assets as our preferred alternative asset class along with hedge funds," they wrote.
The dramatic collapse of the TerraUSD stablecoin and connected luna cryptocurrency had soured sentiment among many crypto investors, the strategists said. But they added that there was so far little sign that venture-capital funding into crypto was drying up.
But the investment bank said it was now less keen on alternative investments, switching them to a ranking of "underweight" from "overweight" previously.