Nikolaos Panigirtzoglou, J.P. Morgan strategist and bitcoin expert, claimed in March that Bitcoin could exceed $146,000 by the end of 2021 and could overtake gold as a hedge and long-term store of value.
However, following the worst May for Bitcoins price in the past ten years, Nikolaos believes that the dominant cryptocurrency is expected to continue sinking. Nikolaos stated that,
We had argued previously that the failure of bitcoin to break above the $60k threshold would see momentum signals turn mechanically more bearish and induce further position unwinds, and that this has likely been a significant factor in the correction last week in pushing CTAs [commodity trading advisor] and other momentum-based investors to cut positions. The longer-term signal remains problematic, as it has yet to turn short. It would still take price declines to the $26k level before longer-term momentum would signal capitulation.
Crypto scored a fierce May, squashed under the heaviness of negative tweets from crypto influencer Tesla CEO Elon Musk and fears of approaching administration regulation from the U.S , China. Bitcoin costs shed 37% in May and is down 43% from their mid-April pinnacle of $64,829. Alesia Haas, Coinbase CFO, stated that
I think that those who were new to this space may have underestimated the volatility that we can see in this market. But crypto is volatile, and we have to remember this is a young industry and a very nascent asset class. So while we have seen a lot of volatility, we have been dealing with this since the beginning.
Based on Bitcoin’s volatility ratios to gold, Nikolaos forecasted that Bitcoin would continue to trade between $24,000 and $36,000 in the mid-term and further added, “We note that the mere rise in volatility, especially relative to gold, is an impediment to further institutional adoption as it reduces the attractiveness of digital gold vs. traditional gold in institutional portfolios.”
The fair value for bitcoin based on a levity ratio of Bitcoin to the gold of around x4 would be 1/4th of $145k or $36k. The fair value for Bitcoin based on the current levity ratio of Bitcoin to the gold of around x6 would be 1/6th of $145k or $24k. We, therefore, see a decent value range of $24k to $36k over the medium term.
May crash in Bitcoin has seriously debilitated institutional interest, which will probably stay quiet about costs for the time being. Bitcoin prices had another challenging weekend over the Memorial Day holiday.
Prices entered Saturday at about $36,311 and plunged to as low as $33,633. By Tuesday evening, Bitcoin prices had rallied back a bit to $36,233.
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