The 2022 Crypto winter is still in full swing despite the Crypto market capitalization level holding at $1.2 trillion in the last few days. The Fear and Greed Index still shows a level of 12. This rank indicates that investor sentiments are low.
On the other hand, all is not lost in the Crypto market. According to Nikolaos Panigirtzoglou, a strategist at JPMorgan, the BTC is undervalued, and its correct value is $38,000. Compared to the current price of $29,675, this shows that Bitcoin has the potential to surge by 25% in the short term.
Bitcoin is An Alternative Investment Instruments
Adoption of Cryptocurrencies is rising sharply to the extent that governments and central banks such as the ECB are mulling adopting policies to regulate Crypto. JPMorgan believes that BTC offers an ideal alternative investment compared to the beleaguered traditional financial markets such as the stock, derivatives, commodities, and property markets in the red as the federal reserve tightens monetary policy to curb galloping inflation in the US.
Unlike traditional financial instruments, futuristic digital assets are decentralized and not susceptible to manipulation by individuals. As Cryptos head into the second decade since the founding of Bitcoin by Satoshi Nakamoto, they are becoming more mature.
Correlation Between the Crypto and Stock Market is High
Institutional investors are the major hodlers of digital assets. Tesla, for instance, holds digital assets worth $1.26 billion, according to the financial statement for the first quarter of 2022. Since they are also the major consumers of stock market products, a market shakeup makes them strategize across the board, adversely impacting the Crypto market.
At the onset of the bear market, there has been a steep Crypto sell-off as investors rush to hedge their wealth against potential losses. The recent Terra UST and LUNA token crash exacerbated the bears, but Terra is making a comeback by creating Terra 2.0 and burning the UST.
BTC Reversal to Take Weeks
BTC hodlers may be wondering how long BTC would take to trade at a fair value of $38,000, as forecasted by JPMorgan. However, the top-tier bank expects this to happen when the oversold Crypto market cools off in the next few weeks.
On the other hand, Benjamin Cowen, a leading crypto analyst, and trader, projects that the reversal would occur within the next 200-day moving average forecast. However, the forecast indicates that BTC could bottom out at $25,000 like the 2018 cycle, where the largest digital asset hit rock bottom before establishing a support level.
In the coming weeks, the BTC price is expected to trade sideways as the federal interest rates take root in the market and the UST crash effect wanes.