JPMorgan Strategists See ‘Modest’ Headwind for Bitcoin Price

Bitcoin faces a “modest headwind” in the short term based on an analysis of bets in the futures market and an estimate of the cryptocurrency’s intrinsic value, according to JPMorgan Chase & Co.

A positioning indicator derived from futures shows that “there still appears to be an overhang of net long positions,” strategists including Nikolaos Panigirtzoglou wrote in a note Tuesday. A drop in Bitcoin in September eliminated much “froth” but it remains about 13% higher than an estimate of intrinsic value, they said.

Bitcoin slid over 8% last month but held above the $10,000 level and has since rallied back past $11,000. While cryptocurrencies have had a volatile year, the Bloomberg Galaxy Crypto Index of digital coins has surged more than 80%, turning the sector into one of this year’s best performing asset classes.

JPMorgan Strategists See ‘Modest’ Headwind for Bitcoin Price

The JPMorgan strategists said they calculated an intrinsic value by effectively treating Bitcoin as a commodity and looking at the marginal cost of production. They also said corporates are emerging as a source of demand, after payments firm Square and technology company MicroStrategy made significant purchases.

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