Cryptocurrencies Replace Real Estate as Favorite Asset Class, Says JPMorgan
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American bank JPMorgan released a new report on cryptocurrencies. In the document, the bank states that this asset class is taking the place of real estate in terms of growth potential.
Traditionally, investors see real estate as an important diversification tool, especially as a way to protect assets. However, cryptocurrencies are starting to take on this role.
In this regard, JPMorgan also points out that BTC is trading below its “fair value”. By the bank’s metrics, the cryptocurrency is 26% below the bank’s target price of $38,000.
JPMorgan identifies price upside
According to a new report by Fortune, JPMorgan strategists guided by Nikolaos Panigirtzoglou say BTC has room to grow. At the same time, the team predicts a downturn in the housing market due to rising interest rates.
This increase is related to the US interest rate, which is on an upward trend. But the country’s base rate guides all other rates, including the real estate market. That is, loan and mortgage rates tend to rise, decreasing demand and the price of real estate.
In this regard, JPMorgan claims that the price of BTC is on the opposite side, with undervaluation. In the bank’s analysis, the fair price of BTC is $38,000. Based on the current price ($29,049), the upside of BTC appreciation is 26%.
“Last month’s cryptocurrency market correction looks more like the capitulation from last January/February. Going forward, we see an upside for the BTC and cryptocurrency markets in general,” the report reads.
Recently, the bank’s strategists downgraded alternative asset ratings from “overbought” to “underbought” due to lingering macroeconomic challenges. While it sounds like a negative, the rating reinforces JPMorgan’s view that there are buying opportunities in this class.
Blockchain investments continue to grow
Strategists further say that the most recent drop in total market cap has had little to no impact on the rate at which venture capital firms are investing their funds in virtual assets. That is, the appetite of large investors in the market remains strong.
Since BTC began its record run of devaluations, the market has lost more than $1 trillion in value. But venture capital companies continue to increase the share of their equity destined for this market.
Recently, Andreessen Horowitz announced the launch of two new cryptocurrency funds. The first, Crypto Fund 4, has a significant sum of US$ 6.5 billion for investments in digital assets. Another fund, with $600 million, targets Metaverse games.
JPMorgan’s stance goes against the personal position of CEO Jamie Dimon, who has already referred to BTC as “useless” and “fraud”. However, the CEO acknowledged that blockchain and decentralized finance (DEFI) technologies have value.
“Decentralized finance and blockchain are real, new technologies that can be deployed publicly and privately, with permission or not. JPMorgan Chase is at the forefront of this innovation,” said Dimon.
