According to JPMorgan Chase & Co., Bitcoin can have potential substantial long-term gains as it competes with gold for investment flows.
Bitcoin’s market capitalization of about $ 575 billion is expected to increase 4.6 times, for a theoretical Bitcoin price of $ 146,000, to match total private sector investment in gold through funds traded on stock exchanges or bars and currencies , wrote strategists led by Nikolaos Panigirtzoglou in a note. But that outlook depends on the volatility of Bitcoin converging with that of gold to encourage more institutional investment, a process that will take some time, they said.
“A passion for gold as an‘ alternative ’currency implies a great long-term advantage for Bitcoin,” strategists wrote on Monday. However, “volatility between Bitcoin and gold is unlikely to occur quickly and is a multi-year process in our minds. This implies that Bitcoin’s theoretical price target of $ 146,000 above should be considered a long-term goal and therefore an unsustainable price target for this year. ”
Bitcoin fell to 17% on Monday, the biggest drop since March, after failing to hit $ 34,000 for the first time over the weekend. The changes are a reminder of the famous volatility of the largest cryptocurrency, the price of which has more than quadrupled in the last year.
More institutions and pointed out investors, from Paul Tudor Jones to Scott Minerd and Stan Druckenmiller, have started allocating funds to Bitcoin or have said they are open to doing so. While some argue that cryptocurrency offers protection against the weak dollar and the risk of inflation in a world flooded with fiscal and monetary stimulus, others say retail investors and funds as long as they follow the trend are bombing. an unsustainable bubble.
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For now, JPMorgan sees the headwinds of the largest cryptocurrency, with indicators such as the accumulation of long speculative positions and an increase in investment portfolios containing small amounts of Bitcoin showing potential foam.
“Valuation and positioning has become much more difficult for Bitcoin in the early nine years,” the strategists wrote. “While we can’t rule out the possibility that the current speculative craze is spreading further pushing the price of Bitcoin into the agreed region of between $ 50,000 and $ 100,000, we believe these price levels would be unsustainable.”
Bitcoin rose 3.3% to $ 32,056 as of 12:40 p.m. in Tokyo, while the broader Bloomberg Galaxy Crypto index advanced about 1.8%.
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