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JP Morgan Fearful of “Downside Risk” for Bitcoin Market, Others More Optimistic

JP Morgan's Nikolaos Panigirtzoglou thinks Bitcoin has some downside risk - Other Analysts More Optimistic
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Over the past 10 days, the Bitcoin market has finally mounted a comeback. After falling as low as $6,800 near the start of the month, the leading cryptocurrency rocketed higher into the second week of January, reaching as high as $8,450 earlier this week.

The price has since retraced to $8,200, where bulls and bears seem to be fighting for control over the broader digital asset market.

Despite the uptrend that is forming, a team of analysts at JP Morgan, led by a managing director, is wary of downside risk for this nascent market, especially for Bitcoin.

Bitcoin Has “Some Downside Risk,” JP Morgan Team Declares

Bloomberg on January 10th released an article outlining a research note penned by strategists at JP Morgan, one of the world’s largest financial institutions and one of the first banks to have formally delved into the crypto space with its own token based on a private version of Ethereum.

Per the note, one of JP Morgan’s managing director, Nikolaos Panigirtzoglou, noted that the cryptocurrency has some downside risk

He specifically looked to the fact that Bitcoin’s intrinsic value, calculated by the Wall Street giant by looking at the marginal cost of production of a single coin by weighing the price of computational power (via ASICs) and electricity costs, which shows that the fair price of BTC is still around $5,000:

The market price has declined by nearly 40% from its peak while the intrinsic value has risen by around 10%… The gap has not yet fully closed, suggesting some downside risk remains.

relates to JPMorgan Sees ‘High Anticipation’ for CME Bitcoin Options LaunchWhile JP Morgan’s chart shows that Bitcoin often deviates from the intrinsic value they calculated, there does exist a large gap, which was bearish for this market at the end of 2018 as depicted in their chart, which shows that a drop in the intrinsic value of BTC preceded a 50% decline.

Others Beg to Differ, Offer Optimistic Analyses

While JP Morgan may be bearish on Bitcoin for now, other analysts from prominent firms are getting optimistic.

Per previous reports from Blockonomi, senior commodities strategist Mike McGlone of  Bloomberg noted in an extensive report on the cryptocurrency market that Bitcoin is preparing to have a positive year.

McGlone wrote that he expects for Bitcoin to extend its gains back towards $14,000 sometime this year.

While he did admit that there is room for downside towards $6,000, the analyst noted that the trend is more positive than negative. McGlone specifically looked to his sentiment and the growing mass of evidence that suggests Bitcoin is becoming a safe-haven investment that is closely correlated with gold.

“The fact that a store-of-value asset with a fixed supply and increasing adoption is more likely to appreciate in price will keep Bitcoin supported in 2020… we expect movements in gold — which appears as a nascent bull market — to remain a proxy for Bitcoin,” he wrote, accentuating this narrative.

And it isn’t only this Bloomberg senior analyst that’s optimistic. Fundstrat Global Advisors, a top market strategy and sector research company based in New York, recently released its 2020 Crypto Outlook to its clients.

The entire report wasn’t publicly released, though the company released a sneak peek via its Twitter page, in which Fundstrat revealed three reasons why they expect to see Bitcoin appreciate by over 100% in 2020.

These three reasons are as follows:

  1. This year, Bitcoin will see what is known as a “halving” or “halvening,” when the number of coins issued per block gets cut in half, effectively resulting in a 50% decrease in the inflation rate of the leading cryptocurrency. A price model created by pseudonymous quant PlanB, accurate to a 95% R squared when backtested, suggests BTC’s fair value will rise to $50,000 after the May 2020 halving. Also, if demand increases and the growth rate of the number of BTC decreases, price should naturally increase.
  2. Geopolitical risk may be a boon for Bitcoin. With the ongoing conflicts between the U.S. and China, the U.S. and Iran, and other spats taking place, BTC may begin to prove itself as a digital, non-sovereign store of value in these trying times, as mentioned by McGlone.
  3. The 2020 elections purportedly may help the cryptocurrency market. Fundstrat did not expand on this point in their sneak peek.


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I am a writer who has been following the cryptocurrency space since 2013. My insights and interviews have been featured in leading publications in the industry such as LongHash, NewsBTC, and Decrypt. When I am not writing, I work as a team member of the EXODUS division of HTC, a Taiwanese electronics company. I own a small amount of Bitcoin. Contact NickC@blockonomi.com

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