On Monday, the price of Bitcoin moved up by as much as 17%, continuing its march to new highs. The largest cryptocurrency in the world has recently come across a bullish phase which refused to subside. Now, JP Morgan believes that the pattern of price movement matches the boom-bust cycle of 2017. During the year, Bitcoin’s price increased steadily to reach $20,000 but eventually nosedived.

Has Bitcoin Gotten Ahead of Itself?

If JP Morgan is to be believed, the cryptocurrency has crossed its “intrinsic value,” a path that it took in 2017 as well. In a note sent on Friday, strategists including Nikolas Panigirtzoglou found that the coin is mirroring the same pattern. They implied that if Bitcoin is treated as a commodity and its cost of production is calculated using estimates related to electricity expenses, computational power and hardware energy efficiency, the coin looks overpriced.

The strategists wrote:

“Over the past few days, the actual price has moved sharply over marginal cost. This divergence between actual and intrinsic values carries some echoes of the spike higher in late 2017, and at the time, this divergence was resolved mostly by a reduction in actual prices.”

Bitcoin’s Dramatic Price Rise

In 2017, especially in the last quarter, Bitcoin experienced frenzied highs. The coin prices moved up to $20,000, defying all expectations. However, as soon as it reached these highs, the prices tanked. The coin, along with the broader crypto industry, experienced a crypto winter when prices remained down for over a year.

Bitcoin prices experienced a stir in May this year. After spending most of the first quarter of 2019 below $4,000, the coin went up to $5,000 in April. In May, the coin looked in a much better position. In London morning trade, the price of the currency was up by 11%, just shy of $7,900.

The strategists also said that it is very challenging to define the fair or intrinsic value of any cryptocurrency. They also acknowledged that some researchers do not find any fundamental value in Bitcoin while some others believe that its fair value exceeds its current prices.

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