Bitcoin’s (BTC) surge in price over the past few weeks has caught the attention of both hardcore cryptocurrency enthusiasts and mainstream investors alike.
While the utility of Bitcoin has certainly increased in the past year, with advancements in both the overlying infrastructure and transaction efficiency, some institutions and analysts continue to tie its intrinsic value solely to the costs associated with mining a single BTC.
Holger Zschaepitz, a German market analyst and economist, recently highlighted a chart by JPMorgan (JPM) that suggests Bitcoin’s market price is again beginning to far exceed its intrinsic value, in a manner similar to the 2017 bull run.
— Holger Zschaepitz (@Schuldensuehner) May 17, 2019
Given the chart created by JPMorgan, the intrinsic value of Bitcoin would be just shy of $5,000, placing a roughly 56% premium on the current market price of the largest digital currency.
As one might imagine, the response to the analysis was less than positive as many see the mining cost model as an outdated metric for cryptoasset valuation.
The chart does indicate that we could be on the verge of yet another parabolic surge as the gap between mining costs and market value continues to widen. However, it’s always worth noting that past events aren’t always the best predictor of future movements.
Disclaimer: This article’s author has cryptocurrency holdings that can be tracked here. This article is for informational purposes only and should not be taken as investment advice. Always conduct your own due diligence before making investments.