Major bank backs bitcoin over real estate

In a key move, a US investment bank has told clients that cryptocurrency has taken over real estate as the preferred alternative asset.

A major US investment bank has revealed that it is replacing real estate with cryptocurrency as its preferred alternative asset.

JPMorgan has claimed that bitcoin is massively undervalued right now, following a shocking few weeks for the cryptocurrency, with the banking giant saying its fair price is 28 percent above its current level.

The current bitcoin price is around $29,537 ($A41,637), but JPMorgan maintains $38,000 ($A53,572) as a fair price for the cryptocurrency, a figure it originally set in February.

This number is based on the assumption that bitcoin is about four times more volatile than gold, but noted that if the volatility differential narrows to three times, the fair price would rise to $50,000 dollars ($A70,526).

JPMorgan’s long-term theoretical target for bitcoin rose to $150,000 ($A211,561), up from $146,000 ($A205,919) in 2021.

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In a note to customers, the bank’s strategists, led by Nikolaos Panigirtzoglou, revealed that the bank was beginning to value cryptocurrency over other assets such as real estate.

“The crypto market correction of the past month looks more like capitulation than last January/February and going forward we see an uptick for bitcoin and crypto markets in general,” the note said.

“While public markets are already pricing in significant recession risks, and digital assets have repriced significantly after the terra USD collapse [UST]some alternative assets, such as private equity, private debt and real estate, seem to be lagging somewhat.

“So we’re replacing real estate with digital assets as our preferred alternative asset class, along with hedge funds.”

This follows a few weeks of horror for cryptocurrency, with market analysts warn that the worst is yet to come.

Scott Minerd, chief investment officer of Guggenheim Investments, has warned that bitcoin will fall to just $8,000 ($A11,000) in value.

If that happened, it would mean that the blockchain would lose about 70 percent of its current value.

“If you consistently go below $30,000, $8,000 is the ultimate bottom, so I think we have a lot more room at the bottom,” Mr Minerd said. CNBC

However, in good news, the CIO also said that while most cryptos are “junk”, bitcoin and ethereum will survive.

However, he does not think that bitcoin and ethereum will become the biggest players and used an analogy of the dotcom boom in the 2000s.

“I don’t think we’ve seen the dominant player in crypto yet,” he said.

“If we were here in the internet bubble, we’d be talking about how Yahoo and America Online were the big winners.

“Everything else, we couldn’t tell you if Amazon… would be the winner.

“I don’t think we’ve had the right prototype for crypto yet.”

Cryptocurrency has been stuck in a rut for most of 2022, but plunged to new lows for the year last week after a stable coin plunged 98 percent in just 24 hours — something that should have been impossible.

The cryptocurrency community continued to falter as terra (UST), formerly in the top 10 most valuable cryptocurrencies in the world, dropped below $US1 ($A1.42) earlier this month.

The impact was immediate.

Skittish investors have backed off, leaving the entire cryptocurrency space in distress, with bitcoin and ethereum momentarily hitting levels not seen since last June.

– With Alex Turner-Cohen

Read related topics:cryptocurrency

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