Bitcoin’s intrinsic value and market price aligned

Bitcoin’s intrinsic value and market price aligned
  • Bitcoin's value and its market price are finally in sync, according to JPMorgan strategist.
  • The strategist says that this happened due to Bitcoin's recent third halving.
  • JPMorgan calculated the cost of production, coming up with a price of $9,500 equal to 1 BTC.

Bitcoin (BTC) price is constantly shifting, going up or down depending on countless factors that may or may not have an actual impact. However, the price is still a subject of speculation every day, because it is not always the same as the coin’s intrinsic value.

Bitcoin’s price correctly reflects its value

Many would agree that these two differ most of the time. However, according to Nikolaos Panigirtzoglou, a strategist working at JPMorgan — these values are now aligned. In other words, Bitcoin’s fundamental value and its market value are currently the same.

According to Panigirtzoglou, there is usually a gap between the two values which can be larger or smaller. This gap has now closed, and Panigirtzoglou believes that this happened after Bitcoin’s third halving.

Back in January of this year, the strategist claimed that Bitcoin’s intrinsic value sits significantly lower than its market price at the time. In other words, he believed that the coin was overvalued.

Now, however, the two are in line, which means that Bitcoin’s price finally accurately matches the coin’s worth.

How did JPMorgan calculate Bitcoin’s intrinsic value?

As many may know, the intrinsic value of any asset, including Bitcoin, allows analysts to determine whether the asset’s price is too high, too low, or a realistic representation of asset’s worth. This can be rather difficult to assess with cryptocurrencies.

After all, their price shifts based on their use cases, almost every new development, market sentiment, and more. As for the asset’s intrinsic value, JPMorgan came up with a way to evaluate it by treating it as if it were a commodity. Then, the analyst looked at the coin’s marginal cost of production, which includes electricity cost, and the necessary computational power.

In the end, Panigirtzoglou deduced that Bitcoin halving allowed for the gap between the market price and intrinsic value to close. In other words, the Bitcoin value now shows the coin’s real value, which is around $9,500 per unit.

By Ali Raza
A journalist, with experience in web journalism and marketing. Ali holds a master's degree in finance and enjoys writing about cryptocurrencies and fintech. Ali’s work has been published on a number of cryptocurrency publications. Raza is the co-founder of 5Gist.com, too, a site dedicated to educating people on 5G technology.
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