Bitcoin is Emulating 2017 and is Being Traded Above its Intrinsic Value, Alleged JP Morgan Report Says

Bitcoin almost certainly has bottomed out, and bullish sentiment is already widespread. After a sharp drop of over $1,000 caused by a possible sell wall placed by a manipulator, the most important crypto in the global marketcap recovered and bounce back after testing the 7,000 USD zone.

Many analysts have explained this phenomenon from different perspectives: While some argue that this behavior was predictable according to certain technical analysis criteria, many others believe that Bitcoin increased its price thanks to fundamental reasons ranging from the strong developments and the growing adoption of cryptocurrencies to rumors that an increasing number of institutional investors are playing with the idea of investing in BTC.

However, a somewhat strange explanation seems to come from JP Morgan. According to a tweet from Holger Zschaepitz, a renowned analyst and author of books on economics, JP Morgan issued an analysis stating that BTC is emulating the bullish behavior of 2017.

This would not be at all strange were it not for the bank’s explanation that BTC is being traded at a price higher than its intrinsic value. JP Morgan’s team explains that they calculated the intrinsic value using the production costs (basically associated with mining) as the only reference.

Does Mining Determines Bitcoin’s Intrinsic Value? … Does Bitcoin Have Intrinsic Value at All?

The issue of the intrinsic value of Bitcoin has been widely discussed not only by crypto influencers but by experts in finance.

The concept is very subjective, so it is difficult to quantify, however, most people agree that the intrinsic value is the ability of an investment to generate a return, and this is difficult to calculate taking into account exclusively the costs of mining.

The truth is that theoretically this cost is taken into account as a value close to the minimum in which the Bitcoin should be traded. If the value is too far from this figure, the few miners who do not migrate to another crypto would not put the new tokens in the market at a loss, which would generate a shortage of liquidity, which would increase the value of this coin.

Why the Bitcoin mining cost matters. Miners constantly supply new BTC to the market. If the prices go below the mining cost, they will not put their new tokens in the market (the O1 line moves to O2) If the demand stays the same, the equilibrium price should go up from P1 to P2. Q axis represents the ammont of BTC available, and P represents the price. (P,Q) Represents the point where all the Bitcoins are sold (equilibrium)
Why the Bitcoin mining cost matters. Miners constantly supply new BTC to the market. If the prices go below the mining cost, they will not put their new tokens in the market (the O1 line moves to O2) If the demand stays the same, the equilibrium price should go up from P1 to P2. Q axis represents the ammont of BTC available, and P represents the price. (P,Q) Represents the point where all the Bitcoins are sold (equilibrium)

It seems that BTC has beaten the bearish market and started to go up and become a very profitable activity near April 2019 

So far there has been no official statement from JP Morgan. This lack of official support has caused many to question the bank’s report, especially considering that the bank’s CEO has never had a very favorable stance on Bitcoin.

In the end, the intrinsic value is given by each trader, and it seems that currently many agree that BTC has a lot of growth potential.

Leave a Reply