Nikolaos Panigirtzoglou, lead strategist at JPMorgan, confirmed that the banking giant keeps its bullish projection for the leading digital asset intact. Despite the recent price crash and volatility, the bank’s adjusted model and the Bitcoin production cost still point to a theoretical target of $170,000 in the coming months.
The entity’s valuation model, which compares the cryptocurrency to gold, suggests this price target for a period of six to twelve months. Analysts find it encouraging that Strategy’s enterprise value-to-Bitcoin holdings ratio (mNAV) remains above 1.0. Furthermore, the company has a $1.4 billion reserve fund, which acts as a vital financial cushion to cover dividends and interests without selling assets.
Strategy, founded by Michael Saylor, remains the largest corporate holder with 650,000 BTC on its balance sheet currently. Although the market has punished the stock following the price drop from $120,000 to $82,000, fundamentals hold up. On the other hand, JPMorgan reduced its Bitcoin production cost estimate from $94,000 to $90,000, due to the recent decrease in hashrate and mining difficulty on the blockchain.
Could miner capitulation trigger a sustainable price recovery?
The report identifies the upcoming MSCI index decision on January 15 as a key asymmetric catalyst for investors. Given that the stock drop since October already discounts a potential exclusion from the index, a positive outcome could fuel a sharp and significant rebound in valuation. Thus, the risk appears to be skewed to the upside, offering a potential opportunity for those betting on the company’s recovery.
Likewise, the bank noted that deleveraging in perpetual futures markets post-October 10 appears to be mostly behind us. This indicates that the market has eliminated much of the excessive speculation that exacerbated recent volatility. Also, selling by high-operating-cost miners has contributed to clearing supply, leaving a healthier market less prone to cascading liquidations.
A prolonged stay of the market price below the production cost could become self-reinforcing if marginal miners capitulate. However, as seen in 2018, the reduction in difficulty helps balance the ecosystem by lowering operating costs for survivors. Therefore, the network seeks to stabilize economically following the severe correction, establishing a firmer technical floor for the immediate future.
Finally, the financial institution maintains a constructive view based on the purge of weak positions and the strength of corporate reserves. It is expected that the stabilization of the Bitcoin production cost will act as a fundamental support while the market digests recent events. Investors should closely monitor the ability of current support to withstand future liquidity tests before confirming a definitive trend reversal.
