J.P. Morgan estimates bitcoin fair value at $38K, 15% lower than recent price

Bitcoin's (BTC-USD +1.0%) biggest challenge going forward is its volatility, with its boom and bust cycles hindering institutional adoption, said J.P. Morgan strategists led by Nikolaos Panigirtzoglou. With that reasoning, they put fair value for bitcoin (BTC-USD) at $38K, based on a volatility ratio of BTC to gold of about 4x. That's about 15% less than bitcoin's recent price of ~$44.8K. In an upside scenario, where the ratio moderates to ~3x, the fair value would increase to ~$50K, the strategists said in a note to clients. The assessment was part of their alternatives outlook and strategy for 2022. They expect this year to be more challenging and "mean-reverting" for digital assets. The J.P. Morgan strategists are still overweight on alternatives but their outperformance vs. a traditional portfolio is expected to be narrower than in 2021. "By year-end a traditional portfolio is expected to earn no more than 8% from current