Main Reasons Why JPMorgan Lowered Its Long-Term Bitcoin Price Target Of $150,000 To $38,000

Institution interest in Bitcoin is decreasing because of high volatility in Bitcoin prices.

Maintaining high volatility is limiting institutional adoption of bitcoin, JPMorgan noted. Business Insider writes that JP Morgan lowered its long-term BTC prediction from $150,000 to $38,000.

“Our previous projection that the bitcoin to gold volatility ratio will fall to around 2x later this year seems unrealistic. Our fair value for bitcoin based on a volatility ratio of bitcoin to gold of around 4x would be 1/4th of $150,000, or $38,000.”

JPMorgan specialists noted that the current 50% pullback from the all-time high in November highlighted the nature of the boom-bust cycle (The boom and bust cycle describes alternating phases of economic growth and decline typically found in modern capitalist economies.), which is an obstacle for institutions to add BTC to their portfolio.

JPMorgan’s prior $150,000 target assumed convergence of bitcoin volatility to that of gold, and equalization of bitcoin allocations to that of gold in investor portfolios. The latest wave of selling in Bitcoin cast doubt on its diversification properties, as BTC went in tandem with the decline in the stock market, analysts added.

“The biggest challenge for bitcoin going forward is its volatility and the boom and bust cycles that hinder further institutional adoption,” JPMorgan said.

JPMorgan did not rule out a further decline in bitcoin prices amid no signs of the capitulation of buyers.

“The open interest across futures contracts and the amount of bitcoin or ether held on exchanges, are pointing to the less panicky or abrupt unwinding of positions than last May in particular with respect to larger crypto investors. In turn, this implies that this month’s corrections look less like capitulation relative to last May,”