$73,000 is a ‘reasonable’ price target for Bitcoin, say JP Morgan strategists
Many analysts have predicted that Bitcoin is set to hit $100k either by year-end or early next year. British bank Standard Chartered had also stated earlier that Bitcoin could surge to $100,000 in 2022, and could be worth more than $175,000 in the longer term.
Oct $61K new monthly close ATH!✅
Ok ok, 3% rounding error .. close enough for me
Next targets: Nov>$98K, Dec>$135K? pic.twitter.com/7LSnQBYJ33
— PlanB (@100trillionUSD) November 1, 2021
However, JP Morgan strategists pinned Bitcoin’s current fair value at around $35,000, on the back of its volatility. As reported by Bloomberg, the strategists noted that if the “relative volatility gets halved into next year,” then a price target of $73,000 “seems reasonable,” adding,
“This challenges the idea that a price target of $100k or above, which appears to be the current consensus for 2022, is a sustainable bitcoin target in the absence of a significant decline in bitcoin volatility.”
It is noteworthy that just last month, JP Morgan had noted that Bitcoin is turning out to be the new gold as a hedge against inflation. And that’s what led to its surge in most part of the year. But they have now also noted that Bitcoin’s current volatility is around “four times” when compared to the yellow metal.
Nevertheless, JP Morgan Chase & Co. strategists continue to predict that alternative assets, including digital currencies, “should continue to outperform” in 2022. That is, when compared to traditional investments like bonds and stocks.
Should investors just jump int0 the crypto space?
Not really. The strategists noted,
“Digital assets are on a multiyear structural ascent, but the current entry point looks unattractive.”
That is why the J P Morgan’s analysis suggested including other alternative asset classes in their portfolios, even when digital assets are expected to rise by 15% next year. This is more than double the 5% expected ROI from traditional investments.
Also, this is a higher climb when compared to expected returns by alternatives like hedge funds and real estate. But, cryptos’ “wild swings diminish their appeal,” as per JPMorgan’s outlook. Additionally, investors are not recommended to hold crypto as a “core” investment, as per the bank.
As per a previous report, financial advisers recommend Bitcoin to investors to take advantage of the “tax-loss harvesting loophole.” It means a possible loss from selling crypto holdings generates taxable losses in a portfolio made of other investments. This is because the revenue services have been treating Bitcoin as a “property.”
But, the loophole might be temporary. According to Interchange Capital Partners’ Ahmie Haum,
“The tax optimization might go away. It most likely will…but a decent amount of people will still want to own cryptocurrencies.”