Bitcoin may have got ahead of itself with its recent rally, according to JPMorgan Chase & Co.

The best-known cryptocurrency has surged beyond its “intrinsic value”, mirroring a similar move in 2017 which preceded a slump, wrote strategists including Nikolaos Panigirtzoglou in a note on Friday. They came to this conclusion by treating bitcoin as a commodity and calculating its “cost of production” using inputs such as estimated computational power, electricity expense and hardware energy efficiency.

“Over the past few days, the actual price has moved sharply over marginal cost,” they wrote. “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 jumped as much as 17% in early Asia trading on Monday.

After crashing from its December 2017 high above US$19 000 and languishing for most of the first quarter below $4 000, bitcoin sparked to life again in April when it rose past $5 000. The rally kicked on this month with the digital currency gaining about 50%. As of 9.10am in London, it was up 11% to just below the $7 900 level.

“Defining an intrinsic or fair value for any cryptocurrency is clearly challenging,” the strategists wrote as a caveat. “Indeed, views range from some researchers arguing that it has no fundamental value, to others estimating fair values well in excess of current prices.” — Reported by Joanna Ossinger, with assistance from Ravil Shirodkar, (c) 2019 Bloomberg LP