The Wall Street investment bank, JPMorgansaid digital assets have now replaced real estate as the “alternative asset class of choice,” and considers $38,000 a fair price for Bitcoin (BTC).
Many media outlets mention that the bank now sees digital assets as the best alternative asset class to invest in, along with hedge funds. She said the broad pullback in risk assets this year has hurt digital assets more than other alternative assets, including private equity, real estate and private debt.
As a result, strategists said there may be more room for crypto to rise against traditional assets. “We are therefore replacing real estate with digital assets as our preferred alternative asset class along with hedge funds,” the JPMorgan strategists wrote.
Alternative assets generally refer to all investment assets that are not stocks, bonds or cash.
The note adds that other alternative asset classes, such as real estate, could soon be affected by a “staggered repricing”. However, the chances of this happening in the digital asset market are lower, as this market has already experienced what looks like a “capitulation”.
The note further states that Bitcoin seems undervalued at present, and that 38,000 USD is a fair price for the first cryptocurrency in the market.
The $38,000 price target that JPMorgan has for Bitcoin represents about a 35% upside from the current price of $29,000.
In February, when BTC was trading above $40,000, the bank also said that the fair value of BTC was around $38,000.
JPMorgan strategists also noted that it is “critical” for crypto-assets in general that funding from venture capital (VC) firms continues to flow into the space. They added that the likelihood of this funding source drying up is low, despite the recent collapse of Terra (LUNA).
“So far, there are few indicators of a decrease in funding (…) Of the $25 billion in venture capital funding year-to-date, nearly $4 billion “USD were made after the events of Terra. Our best estimate is that venture capital funding will continue and a long winter similar to that of 2018/2019 would be avoided,” the note reads.
The note was written by a group of the bank’s investment strategists, including Nikolaos Panigirtzoglou. The same strategist has previously said of Bitcoin that it has potential in an inflationary environment as some investors might see it as a better inflation hedge than gold.
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