Excessive Volatility Hindering Further Mainstream Adoption of Bitcoin, JPMorgan Says

Bitcoin’s biggest challenge is its volatility and the boom and bust cycles that hinder further institutional adoption, JPMorgan said in a research report.

• The bank’s fair value estimate for bitcoin BTC$90,368.33 based on the volatility ratio of bitcoin to gold fell to around four times, or $38,000, analysts led by Nikolaos Panigirtzoglou wrote in the note published last week.
• JPMorgan said its previous forecast of the bitcoin-to-gold ratio falling to around two times now seems unrealistic. The bank sees significant headwinds for both bitcoin and ether.
• The challenge for ether ETH$3,112.58 is different from that for bitcoin because ether derives most of its value as a “decentralized application currency rather than a form of digital gold,” JPMorgan said.
• The Ethereum blockchain is facing challenges due to declining market share in the decentralized finance (DeFi) and non-fungible-token (NFT) sectors, the bank said. During this month’s market correction, Ethereum failed to recapture market share from its main competitors, with ether prices falling by a similar magnitude compared with smaller alternative coins (altcoins), the bank added.
• Similar to last May, unwinding of leveraged futures contracts played a significant role in the crypto market correction in recent weeks, the bank said, but this month’s unwinding of positions seems less severe.
• Bitcoin was trading around $37,244 as of publication time.

Read more: Morgan Stanley Says Bitcoin’s 50% Correction Is Nothing New