By Samuel Indyk
Investing.com – With Bitcoin currently trading around 43% below its all-time high hit earlier this year, some have hoped that the selling pressure would be over. However, analysts at JPMorgan (NYSE:JPM) argue that the price of the world’s largest cryptocurrency still has further to fall.
In a recent research note, JPMorgan strategist Nikolaos Panigirtzoglou said that he sees the medium-term fair value for Bitcoin in the range of $24,000-$36,000.
“We had argued previously that the failure of Bitcoin to break above the $60k threshold would see momentum signals turn mechanically more bearish and induce further position unwinds, and that this has likely been a significant factor in the correction [...] in pushing CTAs and other momentum-based investors to cut positions,” Panigirtzoglou said.
“The longer-term signal remains problematic, as it has yet to turn short. It would still take price declines to the $26k level before longer-term momentum would signal capitulation.”
Institutional demand for cryptocurrencies
Panigirtzoglou also argues that the declines seen in the latest month (Bitcoin fell 35% in May) may weaken institutional demand for digital assets, which some analysts had been banking on when forecasting prices to hit as high as $100,000.
“There is little doubt that the boom and bust dynamics of the past weeks represent a setback to the institutional adoption of crypto markets and in particular of Bitcoin and Ethereum,” Panigirtzoglou writes.
One of the main catalysts for the rally in cryptocurrencies at the start of the year was from hopes that more companies would follow Tesla’s lead and begin accepting cryptocurrencies at payments or buy Bitcoin to diversify their reserves on their balance sheet.
However, following Musk’s U-turn last month, where he said Tesla (NASDAQ:TSLA) would stop accepting Bitcoin due to its environmental impact, there is expectation that further mass institutional adoption will be pushed back.
Separately, fears of increased regulation from China to the US to Europe continues to keep cryptocurrency prices depressed. China announced a crackdown on mining and other transactions last month while central bankers from the US, UK, Sweden, Denmark, and Japan (to name a few) have all recently commented on cryptocurrencies in some form.
Previous Panigirtzoglou comments
This isn’t the first time Panigirtzoglou has predicted a decline in Bitcoin. Back in April when Bitcoin was struggling to reclaim the $60,000 handle, the JPMorgan strategist said that momentum signals would naturally decay “for several months”. Panigirtzoglou was proved right then but there can be no guarantee that his predictions will come true again.