The prolonged downtrend in bitcoin’s sentiment is continuing, causing it to hit its lowest point for many years. While leading crypto is stuck in the red, JP Morgan the US investment bank believes it to be undervalued. JP Morgan sees 30% potential growth for crypto majors.

In a note to investors, the bank’s strategists shared their beliefs in Bitcoin’s potential to raise nearly 30% up from its current price. According to them, the flagman digital currency’s “fair value” may return to $38K levels after the end of the crypto market sell-off.

“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, said in the letter.

has lost nearly 25% of its value since the first days of May highly affected by the depeg of Terra’s stablecoin UST and the crash of its governance coin LUNA.

Venture capital investment in digital currencies continues to grow despite this. Rather, nearly $4 billion of the total $25 billion in VC funding for the year to-date went into crypto after the crash.

“Our best guess is the VC funding will continue and a long winter similar to 2018/2019 would be averted,” JP Morgan suggested.

Replaced Real Estate

In addition, JP Morgan’s strategists stated that the price drop affected digital currencies more than other alternative investment classes, including real estate.

Since the start of 2022, major coins have seen a drop in value of up to 2/3 of what they were worth. They also tumbled along with the stock market, which has been affected by inflation, the conflict in Ukraine, and other factors.

Bitcoin’s positive correlation with stocks reached the historic levels, meaning that the markets tend to see it more like a risky asset instead of safe haven, which could help diversify the portfolio.

JP Morgan said that cryptocurrencies have more potential to rebound from the severe decline. The team of US investment giant admitted, that they are thinking to replace real estate holdings with digital currencies as a “preferred asset class along with the hedge funds”.

Flipside

• JPMorgan (NYSE 🙂 provided six cryptocurrency funds to wealth managers in 2021. Earlier this year the investment bank opened its virtual lounge on Decentraland’s metaverse and made a strategic investment into blockchain analysis firm TRM Labs. The bank’s CEO Jamie Dimon has been one of the most outspoken critics of bitcoin and crypto in general.

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