JPMorgan Says Bitcoin Holds Stronger Long-Term Appeal Than Gold

On Thursday, Bitcoin is facing severe market pressure this week, but the cryptocurrency is now said to be more attractive than gold in the long term, according to a strategist from JPMorgan. 

This comes at a time when the cryptocurrency market is experiencing a severe downturn and when veteran analysts are giving fresh warnings about the market’s potential to fall.

JPMorgan strategist Nikolaos Panigirtzoglou said on February 5 that the major outperformance of gold has altered the long-run risk-reward profile. 

He further said that the strong rise of gold has taken the precious metal close to the upper buying limits. He added that the sharp fall of Bitcoin has increased the long-run upside potential of the cryptocurrency.

Bitcoin Falls Below Mining Cost as ETF Outflows Rise

Bitcoin’s plunge to the $69,000 range has led to the asset trading significantly below its mining costs. JPMorgan estimates the average cost of mining Bitcoin at $87,000. This plunge has led to capitulation among miners in the market.

The spot Bitcoin ETFs are continuing their outflows. The trend indicates low sentiment among retail investors. It also shows that institutional buyers are hesitant. The outflows are an example of the ongoing market stress in the midst of the correction.

JPMorgan said that the ratio of the volatility of the prices of gold and bitcoin has fallen to a record low of 1.5. It reported that the ratio had decreased following the latest weakness in the prices of the cryptocurrency. The drop indicated the assets’ reduced volatility and the tightening of their links.

Source: JP Morgan

However, the value gap may increase in the long term once sentiment improves, according to Panigirtzoglou. He calculated a volatility-adjusted valuation of Bitcoin, which places it at $266,000. 

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He based his calculation on gold investments in the private sector, which amount to $8 trillion, not including investments by central banks.

Sentiment Drives Outlook Amid Bearish Targets

He said that the figure is not a forecast for this year. He explained that the estimate indicates potential in the long term, not in the short term. He added that the forecast depends on the improvement of sentiment. Investors should again see BTC as a hedge similar to gold.

However, other analysts have predicted further pressure for the cryptocurrency. Gold prices have been strong despite the 2% drop to $4,850. 

Veteran trader Peter Brandt has predicted further losses for Bitcoin. He has pointed out the “campaign selling” patterns in the market. He has also stated that the next support could emerge at $63,800.

Source: Peter Brandt

Brandt has also revised his broader target for Bitcoin. He now sees a chance for the cryptocurrency to move toward $54,000. Stifel has also issued warnings about further declines based on technical and on-chain trends.

The market is now facing a split outlook. While JPMorgan points out the long-term potential of Bitcoin, other analysts are preparing for continued weakness.

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