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Bitcoin price crash isn't over just yet: JPM

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Those Bitcoin faithful in search of an end to the month's long rout in prices for popular cryptocurrency may have to wait longer, JPMorgan strategist Nikolaos Panigirtzoglou warns. Yahoo Finance's Brian Sozzi shares the details.

Video Transcript

- Brian Sozzi, you spent the weekend thinking about Bitcoin as the digital asset space, of course, continued its 24/7 trading. In a note from the folks over at JP Morgan talking about-- this one always gets me-- the fundamental value of Bitcoin long-term.

BRIAN SOZZI: Yeah, I spent the weekend thinking about some Bitcoin, stock markets. I worked on my putting a little bit, so "Cruella" at an action movie theater. But more on that later. That, I know, is a very exciting personal moment for me. But yes, a good note by JP Morgan strategist Nikolaos Panigirtzoglou, a closely watched name in the Bitcoin space, coming out with a very interesting note over the weekend, saying, quote, "It would still take price declines--" you know, in Bitcoin-- "to the $26,000 level before longer-term momentum with single capitulation."

So I boiled this down to several bullet points. The ultimate takeaway here is that JP Morgan just doesn't think that the price decline in Bitcoin is, in fact, over. A couple bullet points worth noting here-- institutional demand is harmed by the Bitcoin plunge. Second, capitulation hasn't happened yet despite the plunge that we saw on May. Bitcoin was down to close to 40% in May, a real absolute hammering. And JP Morgan sees fair value for Bitcoin in the $24,000 to $36,000 range, which is just very interesting, which would suggest there is more downside risk to Bitcoin.

The weekend, we didn't see large price declines, kind of sideways trading. But still looking for that upside catalyst, or maybe downside catalyst. So here's my take overall. Where is the next upside catalyst for Bitcoin? It's hard to see, determine at this point. A lot of the things that drove up Bitcoin over the past six months are well known at this point.

Number two, regulation is coming. And I encourage investors to just get ready for it and mentally deal with it. It is, in fact, coming. And last but not least, Myles, I think we've learned, perhaps, that Bitcoin, or cryptocurrency more broadly, isn't an inflation hedge. Look, we saw crypto prices plunge through a trap door in May just as inflation readings have gone through the roof. Where are the buyers?

- I mean, look, I don't envy anyone who works at a Wall Street firm who is now opining on-- on Bitcoin. And it always feels awkward, Julie, when the classic language of financial analysis, things like fair value and momentum, get-- well, momentum makes sense in the context of Bitcoin. But the fair value of Bitcoin or any other crypto asset, I mean, it's-- it has social value. The social value right now is assigned at around $37,000 per Bitcoin. And I find the effort to-- to shoehorn some of that language into this new crypto space awkward at best. Though on the other hand, I don't really have an alternative for the other way you'd go about publishing anything like analysis on this space.

- Well, I mean, you know, the-- the question of what's the next upside catalyst for Bitcoin-- more people decide to buy it at a higher price. That's the next upside catalyst for Bitcoin. That's-- I mean, that's all it is, right? I mean, sure, maybe you'll have some news headline. Maybe Elon Musk will tweet. But you know, at the end of the day, as we know, this is sentiment-driven.

And I think the-- the whole-- what was it-- the Tinkerbelle effect that we talked about, it has value, and because people believe it has value. And how do you put fair value on that? What's in the psychology of the market? I think that's really difficult to do.

BRIAN SOZZI: I knew you were going to respond to that one, Julie. I knew-- I knew-- I sensed you were going to try to decipher when that next catalyst is. Your-- your answer was very much in line with my thinking.

- OK.

- The other-- the other thing too, if-- if we want to-- if you want to do the whole thing, there's no fair value. Nothing has fair value. No stock actually has fair value. Stock analysis is based on guesses. And-- and-- and the notion of fair-- fair is a very loaded, judgmental term that is specific to you rather than-- there is no fair universally that everyone would agree on. Therefore it cannot be a universally valid judgment in the context with which it is, you know, posed here.

So again, you know, we can-- we can do this all day. And maybe whatever is said on Bitcoin is all fine. And you know, if all you want it to do is go up, that's also fine. Yes, Soz.

BRIAN SOZZI: Miles-- Miles, I'll quickly note the churros at Costco deserve to trade at a premium relative to other churros out there on the market.