How Much Is Bitcoin Worth? The Challenges Modeling an Unruly Asset.
investors may be breathing easier now that prices have recovered a bit. But its next move is only getting murkier. Strategists came out with widely divergent views on Bitcoin this past week, highlighting the challenges of trying to model an inherently unruly asset.
In the bearish camp, Stifel’s head of equity strategy, Barry Bannister, sees Bitcoin crashing to $10,000 in 2023, from a recent $43,000. Federal Reserve efforts to tame inflation will push up bond yields and siphon capital from high-risk assets. Bitcoin, he says, “will get crushed,” since it has historically responded to money-supply changes.
J.P. Morgan JPM-1.30% takes a more mixed view. Based on measures of Bitcoin’s volatility in relation to gold, the crypto could fall to $38,000 or rise to $50,000, says global markets strategist Nikolaos Panigirtzoglou. Demand and prices for Bitcoin would rise with lower volatility.
How much will Bitcoin be worth in a year? “That’s the last question I’d try to answer,” says Michael Cembalest, J.P. Morgan’s chairman of markets and investment strategy. He wrote a scathing report on crypto called “The Maltese Falcon.” The title refers to a 1941 movie about a detective who goes on a wild goose chase for a valuable statue that turns out to be worthless.
Bitcoin has appeal as a store of value, Cembalest says, notably in countries with foreign-exchange controls, dual-currency regimes, and governance issues. But it defies normal stock, bond, and real estate valuation tools. If he had to work with one tool, comparisons to gold would be a good start, he says, adding, “A starving man isn’t picky about what’s on the menu.”