The recent pullback of bitcoin — and those experienced by other cryptocurrencies — is unnerving investors. It’s trying their patience in the process. Those are logical responses when the digital currency slips into a bear market and does so in short order.
Still, some analysts and experts believe this isn’t the time for investors to run away from bitcoin and ETFs like the Coinshares Valkyrie Bitcoin Fund (BRRR). There’s increasing chatter this bout of weakness permeating the crypto universe is the buying opportunity late-arriving investors have hoped for.
Predictably, patience will be required. And exercising that virtue can be simplified with ETFs like BRRR. Crypto investors may want to consider that approach. Despite the digital currency’s recently scary pullback, there’s no shortage of compelling price forecasts lingering in the marketplace. For example, JPMorgan analyst Nikolaos Panigirtzoglou said in a Wednesday report that bitcoin could ascend to $170,000 over the next six to 12 months.
Focus on Futures
The JPMorgan analyst noted that much of the recent weakness incurred by digital currencies was via liquidations in the futures market. He pointed out that while that was occurring last month, inflows to ETFs like BRRR were decent.
“Overall, we believe that perpetual futures are the most important instruments to watch in the current [juncture. And] the message from the recent stabilization is that deleveraging in perpetual futures is likely behind us,” observed Panigirtzoglou.
In addition to the lessons from the futures market, Panigirtzoglou said gold could also be a harbinger of a bitcoin rebound. His basis was that the yellow metal’s recent uptick in volatility could make bitcoin more appealing to market participants.
“The bitcoin-to-gold volatility ratio has drifted further below 2.0, implying that bitcoin currently consumes about 1.8 times more risk capital than gold. Based on this relationship, the analysts estimated that bitcoin’s current market capitalization of around $2.1 trillion would need to rise by nearly 67%,” reported Yogita Khatri for The Block.
That 67% projection was made when the cryptocurrency was trading around $103,000. That implies a run to $170,000 — patience required — is possible. Indeed, JPMorgan has previously leaned into the bitcoin/gold comparison. And that could be meaningful to investors evaluating BRRR.
“Last month, in a similar analysis, JPMorgan analysts said bitcoin appeared significantly undervalued relative to [gold. That implies] potential upside toward $165,000 by year-end. In August, they made a comparable projection, estimating bitcoin could reach around $126,000 by year-end. Bitcoin later hit an all-time high of over $126,200 on October 6 before the record liquidation event on Oct. 10,” reported Khatri.
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