JPMorgan says BTC’s fair price in 2022 will be $35K if volatility persists

By: Jinia Shawdagor
Jinia Shawdagor
Jinia was a Reporter at Invezz covering the cryptocurrency market and blockchain industry. With years of experience, she has… read more.
on Nov 3, 2021
  • JPMorgan strategists, BTC might surge to $73,000 if its volatility plunges by 50%.
  • The bank predicts crypto will rise 15% in 2022, but the ride might be too bumpy due to volatility.
  • According to the bank, the alternative investment sector will grow to $25 trillion next year.

JPMorgan Chase, an American multinational investment bank, has dropped a new prediction on how Bitcoin (BTC/USD) will perform in the coming year. The bank’s strategists shared their BTC prediction in a recent report to investors, noting that BTC’s fair price in 2022 will be around $35,000 (£25,687.37).

Reportedly, the strategists based BTC’s fair value on the bank’s price model. At the time of writing, BTC is changing hands at $63,084.08 (£46,290.78) after losing 0.08% over the past 24 hours. This value is 45% higher than JPMorgan’s set price. However, the strategists believe that BTC can surge to $73,000 if the current volatility decreases by 50% in 2022.

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Led by Nikolaos Panigirtzoglou, the team of strategists pointed out that,

This challenges the idea that a price target of $100k or above, which appears to be the current consensus for 2022, is a sustainable bitcoin target in the absence of a significant decline in bitcoin volatility.

They added that the digital asset sector is on a multiyear structural ascent. However, the current entry point looks unattractive.

Alternative asset class to continue swelling

Advising investors, the strategists noted that putting money in hedge funds and real estate will be more profitable in 2022 because traditional assets like stocks and bonds will underperform. JPMorgan further noted that alternative assets, which include private debt, private equity, and digital currencies, will continue to outperform into 2022.

According to strategists, the alternative asset sector will return 11% in 2022, more than doubling the 5% gain that stocks and fixed income will net. While Panigirtzoglou and his team believe cryptocurrencies will gain 15% in 2022, they claim the ride might be too bumpy. As such, they don’t encourage investors to add them as a core holding in their portfolios.

The investor report was part of JPMorgan’s inaugural outlook centred on alternative investments. Per JPMorgan, the alternative investments sector will grow to $25 trillion ($18.31 trillion) in 2022, doubling 2014’s level.

The bank added that many investment vehicles in this category are not easily accessible, and exiting them can prove challenging because of liquidity constraints. Although this feature makes them unsuitable for money managers that have investment horizons shorter than a year, JPMorgan believes their upside potential offers an opportunity to enhance performance.

To this end, the strategists noted that the category is best suited for institutional investors that seek to invest new cash flows into alternatives compared to institutional investors that want to create strategic/ long-term positions in alternative assets.

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