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According To JPMorgan, Bitcoin Price Might Increase In Excess of $146,000 Over The Long Term By “Crowding Out Gold”

For years it has been common to draw comparisons between Bitcoin (BTC) and the position of gold as a safe place for investors. To date, this comparison has been greatly constrained by the marked disparity in overall market capitalization of the two properties. Gold also controls approximately 4.6 times the current Bitcoin $5.85 billion capitalizations even after a significant increase in the Bitcoin price in Dec. 2020.

According to JPMorgan Chase & Co, bitcoin may have a potential for major longer-term returns, since it is vying for investment flows with gold. 

Bitcoin’s market capitalization of approximately $575 billion will have to increase by 4.6 times, to equal the Bitcoin theoretical price of $146,000, to total private-sector gold investment through currencies or bar coins, written in a note the strategists headed by Nikolaos Panigirtzoglou. This note has banked strategists that outlined a path to the fully private sector investments in Bitcoin which are of equal value, either via exchange-traded funds or via coins and bars, that currently are invested in gold. 

However, such a direction depends fundamentally on the Volatility of Bitcoin converging with the volatility of Precious Metal:

“A crowding out of gold as an ‘alternative’ currency implies big upside for Bitcoin over the long term […] a convergence in volatilities between Bitcoin and gold is unlikely to happen quickly and is in our mind a multiyear process. This implies that the above-$146,000 theoretical Bitcoin price target should be considered as a long-term target, and thus an unsustainable price target for this year.”

As Cointelegraph reported yesterday, on 4 January Bitcoin has experienced several days of extremely unpredictable market action and a short dive of $27,700 and a recovery of nearly $30,000. The coin is trading nearer to $31,500 as of press time. The plummet yesterday was the highest since the “fall” of December 2020 the coin recovered $30,000 in value with incredible results with bitcoin circuit . 

For now, the largest cryptocurrency has been seen by JPMorgan with indicators, including a rise in speculative long positions and brokerage wallets with limited amounts of Bitcoin indicating a possible froth. In the sense of this sustained uncertainty, the JPMorgan strategists have established velar optimistic signals for crypto-currency, suggesting the accumulation of speculative long positions – but still cautioned that it is difficult to read the investment environment over the medium term:

“The valuation and position backdrop has become a lot more challenging for Bitcoin at the beginning of the New Year […] while we cannot exclude the possibility that the current speculative mania will propagate further pushing the Bitcoin price up toward the consensus region of between $50,000–$100,000, we believe that such price levels would prove unsustainable.”

On January 1, Bitcoin hit an all-time high, reaching its corresponding record in the winter of 2017. The same team of Panigirtzoglou’s strategists already proposed in December of last year that in the future Bitcoin could eat gold and expect a big change in institutional allocation to the cryptocurrency. 

At 12:40 p.m., Bitcoin rose 3.3% to $32,056. Tokyo was up about 1.8 per cent for a larger Bloomberg Galaxy Crypto Index.