What price bitcoin? How to Model an Unruly Asset

Artwork by Elias Stein


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Bitcoin investors can breathe easier now that prices have recovered a bit. But his next move only gets murkier. Strategists expressed widely divergent views on Bitcoin last week, highlighting the challenges of trying to model an inherently unruly asset.

In the bearish camp, Stifel’s head of equity strategy Barry Bannister sees Bitcoin crashing to $10,000 in 2023 from $43,000 recently. The Federal Reserve’s efforts to control inflation will push bond yields higher and divert capital away from high-risk assets. Bitcoin, he says, “will be crushed” because it has always responded to changes in the money supply.


JP Morgan

takes a more mixed view. Based on Bitcoin’s volatility metrics against gold, the crypto could fall to $38,000 or rise to $50,000, says global markets strategist Nikolaos Panigirtzoglou. Bitcoin demand and prices would increase with less volatility.

How much will Bitcoin be worth in a year? “That’s the last question I would try to answer,” says Michael Cembalest, president of markets and investment strategy at JP Morgan. He wrote a scathing report on cryptography called “The Maltese Falcon”. The title refers to a 1941 film about a detective who goes after a wild goose for a valuable statue that turns out to be worthless.

According to Cembalest, bitcoin is attractive as a store of value, especially in countries with exchange controls, dual currency regimes and governance issues. But it defies normal tools for valuing stocks, bonds and real estate. If he were to work with just one tool, comparisons to gold would be a good start, he says, adding, “A hungry man isn’t picky about what’s on the menu.

Last week
Inflation and more

Shares fell on Monday after a rally the previous week, then saw a broad advance fueled by positive corporate earnings and a decline in the number of Covid cases, although


Metaplatforms

continued its slide, and protests by Canadian truckers against the vaccine threatened auto production. Then came Thursday, when January’s inflation figure came in at 7.5%, and stocks tumbled on Fed rate fears, and on Friday, concerns over the Russian invasion. For the week, Dow Jones industrials fell 1% to 34,738.06; the S&P 500 fell 1.8% to 4,418.64; and the Nasdaq Composite fell 2.2% to 13,791.15.

The pace of gains


Take-Two interactive software

earnings fell short of expectations and


Pfizer

had to “explain” some of his outlook on his new Covid therapy after the stock plunged. Corn


Chipotle Mexican Grill
,

Uber, and


Lyft

exceeded expectations, as


SVC Health
,

despite a $1.4 billion charge.


waltz disney
it is

theme parks and the streaming service exceeded estimates.


Mattel
,


Coca Cola
,

and


PepsiCo

also beat everything;


Twitter

not.

Ukraine at the limit

Russia and Ukraine have started military exercises. Diplomatic efforts – President Biden speaking with German Chancellor Olaf Scholz and French President Emmanuel Macron meeting Russian President Putin – have continued. Biden said the Nord Stream 2 gas pipeline from Russia to Germany would be suspended if Russia invaded Ukraine, and Putin acknowledged that some of the proposals put forward by Macron had merit. But at the end of the week, Biden warned Americans in Ukraine to get out: “Things could get crazy fast.

follow bitcoin

Prosecutors have accused a New York couple of conspiring to launder the proceeds of 119,754 bitcoins worth $4.5 billion stolen in 2016 from crypto exchange Bitfinex. The United States seized $3.6 billion worth of Bitcoin from 34-year-old Ilya Lichtenstein and 31-year-old Heather Morgan. Morgan, who goes by the name Razzlekhan on YouTube, described herself as “a rapper [who is also] a software CEO, a writer, an economist, and a few other contradictory things.

Rotating peloton

The Wall Street Journal reported that


Amazon.co.uk

made an offer for


Interactive Platoon

; the Financial Times followed up by saying


Nike

was also evaluating an offer.


Apple

and Disney later joined the list. Platoon shares soared; CEO John Foley has stepped down, replaced by former Spotify and Netflix CFO Barry McCarthy; and Peloton said it would cut 2,800 jobs. Foley remains executive chairman.

Annals of Deal Making


Toshiba

said he would break the company into two pieces, not three, after investor protests… As expected,


SoftBank Group
it is

sale of British chip designer Arm to


Nvidia

collapsed after multiple regulatory objections. SoftBank receives a $1.25 billion break fee and said it would take Arm public on the Nasdaq, sparking protests in London. Another headache: Arm’s runaway joint venture in China… Budget airline Frontier said it would buy


Spirit Airlines

for $6.6 billion including debt, the first airline merger since 2016.

Write to Daren Fonda at [email protected]

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