Even as many believe that Bitcoin’s price is lacking and should be higher than it is now, not everyone thinks so. According to multinational banking and financial services company, JPMorgan Chase, The Bitcoin price is right where it should be.
JPM believes that Bitcoin is appropriately priced, even after the recent halving event, based on its ‘intrinsic value’ calculation. Created by JP Morgan analyst Nick Panigirtzoglou, the calculation basically takes two factors into consideration – the cost of mining Bitcoin and its current market price.
Based on the intrinsic value calculation, Bitcoin was undervalued before the halving. Now that the halving has brought about an increase in the cost of production, the intrinsic value of Bitcoin is optimum with the price.
According to JPM, Bitcoin’s intrinsic value correlation is tied to two factors. The first is that the network’s hashrate has reduced by up to 20% because competition among miners for block rewards is a lot higher and much fiercer.
In addition, a considerable number of Bitcoin miners have become obsolete because of the halving. Now that the competition is a lot steeper, the miners that are still on the network and carrying it comfortably, are bringing in more efficiency.
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