JPMorgan: BTC's rise is very similar to the trend in 2017

Bitcoin’s recent rally may have pushed its price above its “intrinsic value,” according to an analysis of data from JPMorgan Chase.

Last Friday, trading strategists including Nikolaos Panigirtzoglou wrote in a report that the surge in the price of Bitcoin, the most well-known cryptocurrency, has exceeded its "intrinsic value", forming a trend similar to that in 2017. After rising all the way in 2017, Bitcoin soon ushered in a big drop in 2018. Strategists regard Bitcoin as a commodity and use factors such as estimated computing power, electricity costs and hardware energy efficiency to calculate its "production cost" to reach this conclusion (of course, whether Bitcoin is a commodity and whether Bitcoin's intrinsic value is its production cost is highly controversial in the crypto industry).

They wrote:

“Over the past few days, realized prices have significantly exceeded marginal costs. The deviation between realized and intrinsic value brings to mind similarities to the Bitcoin price surge in late 2017, when the deviation was mostly resolved through a significant decline in realized prices.”

Bitcoin price and intrinsic value comparison

Since hitting an all-time high of $19,000 in December 2017, the price of Bitcoin has remained below $4,000 for most of the first quarter of this year, but has regained momentum after rising to $5,000 in April. In May, Bitcoin's upward momentum has not slowed down, with a monthly increase of nearly 50%. As of 4:37 p.m., Bitcoin was quoted at $7,841.66, a pullback from the high of $8,286 in the morning.

Bitcoin price has risen above the 200-day moving average

“Defining intrinsic or fair value for any cryptocurrency is obviously very challenging. In fact, some researchers have argued that cryptocurrencies have no fundamental value (intrinsic value), while others have estimated that the fair value of Bitcoin is far greater than its current price.”