Despite the crypto crisis, banking giant JPMorgan says bitcoin is massively undervalued. Maintaining its estimate of bitcoin’s fair value at $38,000, the bank today reiterated the Evaluation he gave the asset in February when the cryptocurrency was trading around $43,400. This price is around 28% higher than its current level of $29,757.
In a note to clients released Wednesday, the bank also said it was replacing real estate with digital or crypto assets as its preferred alternative asset class along with hedge funds, citing a “delayed potential revaluation” in capital- investment, private debt and real estate. Alternative assets generally refer to investments that are not stocks, bonds or cash.
The valuation is a nod of confidence to bitcoin, which is currently trading at less than half of its all-time high of $68,721, and the broader category in general. In addition to rising interest rates and fallout from the war in Ukraine, the cryptocurrency market is grappling with the $50 billion crash of the algorithmic stablecoin TerraUSD and its sister token LUNA. The total cryptocurrency market cap currently sits at $1.3 trillion, down dramatically from $3 trillion in November.
“Last month’s crypto market correction looks more like a capitulation from last January/February and looking forward, we see an upside for bitcoin and crypto markets more generally,” the strategists noted. of the bank, led by Nikolaos Panigirtzoglou, in the report.
The strategists also believe that “the trajectory of venture capital funding would be crucial in helping the crypto market avoid the long winter of 2018/2019,” which followed the initial boom in coin offerings. Just today, Ethereum scaling startup Starkware raised $100 million at an $8 billion valuation and venture capital giant Andreessen Horowitz announced an allocation of $1.5 billion for crypto investments as part of its larger $4.5 billion fund.
“So far, there is little evidence that venture capital funding is drying up after the Terra collapse. Of the $25 billion in venture capital funding year-to-date, nearly $4 billion came after Terra,” the strategists noted. “Our best estimate is that venture capital funding will continue and a long winter similar to 2018/2019 would be avoided.”