JPMorgan's Nikolaos Panigirtzoglou said bitcoin is worth a mere $38,000, despite its recent bounce . He also said there's more to digital assets than just bitcoin prices. The virtual currency climbed above $44,000 earlier this week after falling below $40,000 last month , and has been hovering at the same level since. Panigirtzoglou noted that bitcoin's characteristic volatility is still an obstacle, according to a Feb. 8 note. "The biggest challenge for bitcoin going forward is its volatility and the boom-and-bust cycles that hinder further institutional adoption," he said. "Our fair value for bitcoin based on a volatility ratio of bitcoin to gold of around 4x would be $38,000 modestly below its current price," the strategist noted. "In an upside scenario where there is more normalization in vol to around 3x, the fair value would be around $50,000." Digital assets on an uptrend Panigirtzoglou also called digital assets more broadly — including decentralized finance tokens, nonfungible tokens, stablecoins and other cryptocurrencies beyond bitcoin and ether — an emerging asset class on a structural uptrend. That implies higher growth over the coming years, but investors should expect to see that growth in other areas of Web3 or the metaverse, beyond bitcoin prices. "This growth does not necessarily need to come from continuous price appreciation of existing cryptocurrencies such as bitcoin and ethereum, already popular among institutional investors, but in our mind it is more likely to come from the expansion of the universe of digital assets," Panigirtzoglou said. For example, "NFTs will likely grow exponentially over time as more assets get digitalized and thus NFTs will likely dominate the size of the digital asset universe in the future," he added. "In the future, we are likely to see a multitude of blockchains tailored to specific applications rather than the Ethereum blockchain dominating all applications in the crypto ecosystem." As smart contracts, NFTs and decentralized finance, or DeFi, exploded in popularity throughout 2021, so too have Ethereum competitors like Solana and Cardano, whose networks allow for faster and far cheaper transactions than Ethereum. Panigirtzoglou said this lost share in NFTs and DeFi is the biggest challenge to ether. "Ethereum's blockchain is already facing stiff competition from several blockchains which are effectively trying to replicate Ethereum's functionality," he said. "In contrast to Ethereum, bitcoin is unique in terms of its perception as digital gold and faces little direct competition from other blockchains or cryptocurrencies."
A bitcoin is on a screen showing the Bitcoin-U.S. dollar exchange rate.
Fernando Gutierrez-Juarez | picture alliance | Getty Images
JPMorgan's Nikolaos Panigirtzoglou said bitcoin is worth a mere $38,000, despite its recent bounce. He also said there's more to digital assets than just bitcoin prices.