In this photographic illustration, visual representations of the digital cryptocurrency, Bitcoin, are organized on January 4, 2021 in Katwijk, the Netherlands.
Yuriko Nakao | Getty Images
GUANGZHOU, China – Bitcoin could rise to $ 1 million in the long run to become a reserve currency for the world, according to an asset manager.
But JPMorgan warned of risks in advance as the cryptocurrency continues to rise.
Anthony Pompliano, co-founder and partner of Morgan Creek Digital Assets, said Bitcoin could reach $ 500,000 by the end of the decade. Eventually, it could reach a million dollars per coin, he added, without giving a timeline.
“I think bitcoin will rise to become the world’s reserve currency. I think bitcoin will be much larger than the gold market limit,” he said during the last episode of the podcast “Beyond of the Valley “by CNBC.
Why is a bitcoin rally taking place?
Meanwhile, global central banks have been relaxing monetary policy, such as lowering interest rates and buying assets through the so-called quantitative easing program. to help cushion the blow to the economies affected by the coronavirus pandemic.
“There were billions of dollars that were printed and injected into the economy and everyone, from individuals to financial institutions and corporations, ran around the world looking for the best way to protect their purchasing power, they finally decided that it was bitcoin, ”Pompliano said as he discussed what was behind the rise of Bitcoin.
(Bitcoin) will end up occupying this place in the realm of being that global reserve currency of the Internet generation.
Anthony Pompliano
Morgan Creek Digital Assets
Bitco bitcoin’s prediction that Bitcoin could reach a million dollars is based on a number of factors, including the scarcity of the cryptocurrency that has a limit of 21 million coins, as well as the decentralized nature of the technology.
There is no central authority like a central bank that controls bitcoin.
Instead, the so-called bitcoin network is made up of miners who process transactions. These miners operate a wide range of specialized computers needed to carry out the bitcoin mining process.
Because there are so many different miners, no entity can control the network. And because the computers they use are often very powerful machines, proponents of Bitcoin claim that the network is one of the strongest computer networks in the world.
“As there are more and more people in the market, there is more liquidity. As there is more liquidity, there is more utility. As there is more utility, there is more price stability … you will get a kind of that evolution, ”Pompliano said.
“If you think about this Internet economy, there is no native currency … (bitcoin) will end up occupying this place in the realm of being this global reserve currency of the Internet generation.”
JPMorgan’s long-term pricing target for Bitcoin
In January, JPMorgan released a note to clients setting a long-term “theoretical” price target on bitcoin of $ 146,000 as bitcoin begins to compete with gold.
Gold is widely accepted as a “safe haven” asset where investors turn in times of political conflict or financial market turmoil. Bitcoin is now starting to develop that reputation.
“Bitcoin competes with traditional gold, bitcoin is a form of digital gold,” Nikolaos Panigirtzoglou, JPMorgan’s global market strategist, told CNBC’s “Beyond the Valley.”
He said the value of gold owned by the private sector, solely for investment purposes, is about $ 2.7 trillion. For the Bitcoin market cap to reach that, it would have to reach a price of about $ 146,000.
But there are warnings, the biggest one is the volatility of the Bitcoin price. Digital currency is known for wild price changes. Panigirtzoglou said bitcoin is “five times more volatile than gold.”
The key to Bitcoin’s volatility converging with gold is institutional adoption, said strategist JPMorgan.
“The faster the pace of institutional adoption, the faster the convergence in volatility will occur,” he said.
However, there are risks ahead for the current concentration. While it has been driven by institutional investors, retail participation has also been high.
“The biggest risk is that the flow momentum we’ve seen in recent months will materially slow down from here,” Panigirtzoglou said.
“In particular, when economies reopen, people go back to the office, have less time to negotiate at home, and as a result, a little bit of that, the detail … the momentum of the flow decreases from here, ”he added.