Ether should be as much as 75% lower at around $1,000 based on network activity, JPMorgan says
- Network activity suggests
ethershould be around 75% lower at around $1,000, JPMorgansaid.
- The bank's analysts said institutional interest and network changes were boosting the price.
- But they said ether seemed to have diverged from measures of network activity.
Measures of network activity suggest that ether - the cryptocurrency on the
The bank published a note on Friday that said the recent boom in ether had taken the price above fair value, according to some measures. Ether has soared more than 450% over the past year to a record high above $4,100 on Monday.
JPMorgan's analysts, led by Nikolaos Panigirtzoglou, said measures of computing power and activity on networks can help assess the fair value of
"Essentially, a larger network of users and miners makes the underlying blockchain more secure, and implies greater acceptability of the cryptocurrency on that blockchain," they said.
But the analysts said a simple assessment of mining activity and the number of unique active addresses on the Ethereum network suggested ether should be trading at around $1,000 - more than 75% below Monday's price.
"Prices appear to have diverged somewhat from the measures of network activity since the start of the year," the analysts wrote.
However, they noted that there were a number of factors that had driven up ether since the start of the year - particularly growing institutional interest and upcoming network changes.
The analysts said the European Investment Bank's decision to use the Ethereum blockchain network to issue €100 million ($122 million) of bonds "is surely very significant, as it represents the endorsement of the ethereum blockchain by a major official institution."
Read more: Fundstrat's head of digital assets research walks us through his $100,000 and $10,500 year-end price targets for bitcoin and ether - and shares the 8 tokens he's bullish on
They said upcoming changes to the network that will see some ether coins burned are causing excitement, as they imply reduced supply of the asset.
But the report suggested ether investors may have gotten ahead of themselves by piling into the asset so quickly.
JPMorgan's note also said that the past few weeks have seen large increases in the market size of tokens including Binance Coin,
"The share of
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