JPMorgan Chase & Co., a Wall Street investment bank, says digital assets have surpassed real estate as its "preferred alternative asset class," and that USD 38,000 is a reasonable price for bitcoin (BTC).
According to multiple media reports, digital assets, along with hedge funds, are now the best alternative asset class to invest in. It claims that this year's risk asset selloff has harmed digital assets more than other alternative assets such as private equity, real estate, and private debt.
As a result, the strategists believe that crypto has more room to rise than traditional assets. "We thus replace real estate with digital assets as our preferred alternative asset class along with hedge funds," JPMorgan strategists wrote.
All investment assets that are not stocks, bonds, or cash are referred to as alternative assets.
Other alternative asset classes, such as real estate, could be hit by "lagged repricing" in the near future, according to the note. The chances of this happening in the digital asset market are slimmer because it has already experienced what appears to be a "capitulation."
The note went on to say that bitcoin is currently undervalued and that USD 38,000 is a reasonable price for the world's most popular cryptocurrency.
The USD 38,000 price target set by JPMorgan for bitcoin represents a 30% increase over the current price of USD 29,250. (as of 08:30 UTC).
The bank also stated in February, when BTC traded above USD 40,000, that the fair value of BTC is around USD 38,000.
The fact that venture capital (VC) continues to flow into the space is "crucial" for cryptoassets in general, according to JPMorgan's strategists. Despite Terra's recent collapse, there are few signs that funding is drying up, according to the report (LUNA).
"Thus far there is little evidence of VC funding drying up post-Terra’s collapse. Of the USD 25 billion VC funding year-to-date, almost USD 4 billion came after Terra. Our best guess is the VC funding will continue and a long winter similar to 2018/2019 would be averted," the note said.
A group of investment strategists at the bank, including Nikolaos Panigirtzoglou, penned the note. The same strategist previously stated that bitcoin has potential in an inflationary environment, stating that some investors may consider bitcoin to be a better inflation hedge than gold.
By fLEXI tEAM