With the institutional support of Bitcoin and blockchain technology, the Bitcoin price has sent a strong upward trajectory over the past few months. Despite the inherent volatility of the cryptocurrency, the global adoption of the digital currency is spreading across all industries. JP Morgan Chase recently announced in a note to Business Insider that they expect Bitcoin to rise to $ 130,000 if gold reaches total private sector investment.
JP Morgan has cautiously entered the Bitcoin arena in the past few years, and despite researching blockchain technology fairly early, the banking giant has recently compared Bitcoin to an “economic side show.” However, they came back to this statement by announcing that they will be offering a cryptocurrency investment basket to their customers.
Demand for digital assets has never been higher, and as volatility decreases, more institutional players will come into play. JP Morgan’s new price target for Bitcoin is based on the probability of Bitcoin reaching total private sector investment. JP Morgan made the following comment on the subject:
“Mechanically, the price of Bitcoin will need to rise to $ 130,000 to cover the total private sector investment in gold… Since then, the drop in gold price has mechanically reduced the estimated upward potential of bitcoin as a digital alternative to traditional gold – Assuming an equilibrium with the portfolio weight of gold. . ”
Its price target is based on the volatility of Bitcoin, which converges itself to gold. And while this is unlikely to happen soon, JP Morgan sees this as a long-term recommendation.
Given how large the financial investment in gold is, this kind of crowding of gold as an ‘alternative’ currency means a huge advantage for Bitcoin in the long run.
If this happens, it will definitely affect the price of gold, which is already adversely affected by the increase in cryptocurrencies and the increase in investment in that sector.