According to JPMorgan Chase & Co., Bitcoin has the potential to reach $ 146,000 in the long term as it competes with gold as the asset class.
Strategists led by Nikolaos Panigirtzoglou wrote that Bitcoin’s market capitalization of about $ 575 billion would have to increase 4.6 times for a theoretical price of $ 146,000 to cover the total private sector investment in gold through stock exchange-traded funds or bullion and coins. However, it is emphasized that this outlook depends on Bitcoin shrinking in volatility to encourage more institutional investment. This is a process that will take some time.
Strategy experts commented on Monday:
Your concentration in gold as an alternative currency means a big advantage for Bitcoin in the long run. However, a convergence in fluctuations between Bitcoin and gold is unlikely to happen quickly, and we have a multi-year process in mind. This means that the theoretical Bitcoin price target above $ 146,000 should be seen as a long-term target and therefore an unsustainable price target for this year.
Bitcoin to gold ratio recently hit record high after digital currency quadrupled
On Monday, Bitcoin dropped as much as 17%, the biggest drop since March, after breaking $ 34,000 for the first time over the weekend. The swings are a reminder of the famous volatility of the largest cryptocurrency whose price has more than quadrupled last year.
More institutions and well-known investors, from Paul Tudor Jones to Scott Minerd and Stan Druckenmiller, have either started to fund Bitcoin or have said they are open to doing so. While some argue that the cryptocurrency provides a hedge against dollar weakness and inflation risk in a world full of financial and monetary incentives, others say individual investors and trend-following amount funds are creating an unsustainable bubble.
For now, JPMorgan is seeing a move in the largest cryptocurrency, with indicators like the accumulation of speculative long positions and an increase in investment wallets holding small amounts of Bitcoin showing potential foam.
“At the beginning of the new year, the valuation and position ground for Bitcoin has become much tougher,” wrote the strategists. “While we cannot rule out the possibility that the current speculative frenzy will push the Bitcoin price further up into the consensus zone between $ 50,000-100,000, we believe such price levels will be unsustainable.” They made comments as.