Even with recent sharp declines in bitcoin’s price, Wall Street Bank JPMorgan maintains its volatility-adjusted BTC-versus-gold model target, suggesting a theoretical price around $170,000 in the next six to twelve months.
The largest cryptocurrency was trading close to $91,200 at the time of this report.
Strategy (MSTR) is a significant factor for bitcoin , with market analysts monitoring its enterprise value-to-bitcoin holdings (mNAV) ratio, which is currently about 1.13. This ratio is crucial in assessing forced-selling risks, particularly if it falls below 1.0, according to analysts led by Nikolaos Panigirtzoglou in the Wednesday report.
The report noted it’s promising that the company’s mNAV remains above 1.0.
Analysts highlighted the company’s $1.4 billion reserve fund as a safeguard against the need to sell bitcoin, and mentioned MSCI’s Jan. 15 index decision as an asymmetric catalyst: an exclusion is mostly accounted for after the stock’s significant decline since Oct. 10, while a favorable outcome could spark a sharp rebound.
The firm, established by Michael Saylor, is the largest corporate holder of bitcoin, with 650,000 BTC recorded on its balance sheet. Recently, the company has faced scrutiny after bitcoin’s price dropped from an all-time high above $120,000 to as low as $82,000.
Among other factors, the bank related bitcoin’s recent downturn to renewed pressures on mining in China and adjustments made by higher-cost miners elsewhere, some of whom have reportedly sold bitcoin as energy expenses remain elevated.
JPMorgan revised its bitcoin production-cost estimate from $94,000 down to $90,000 following recent declines in hashrate and mining difficulty.
The hashrate reflects the total computing power of the network dedicated to mining and validating transactions on a proof-of-work blockchain, often used as an indicator of mining competition and difficulty.
Extended periods below production cost can create a self-reinforcing cycle as marginal miners exit, leading to reduced difficulty and further lowering cost estimates, similar to occurrences in 2018, the analysts indicated.
The report also suggested that the post-Oct. 10 deleveraging in perpetual futures seems largely resolved.
Read more: JPMorgan Warns MSCI Decision Could Force Strategy Out of Top Equity Indices
