According to JPMorgan Chase & Co. Bitcoin may have significant further gains in the long run as it competes with gold for investment flow.
Bitcoin’s market capitalization of about $ 575 billion would have to increase by 4.6 times – at a theoretical Bitcoin price of $ 146,000 – to adjust total private sector investment in gold via exchange traded funds or rods and coins, lead strategists write by Nikolaos Panigirtzoglou. in a note. But the outlook depends on the volatility of Bitcoin coinciding with that of gold to encourage more institutional investment, a process that will take a while, they said.
“The displacement of gold as an ‘alternative’ currency means a big boost for Bitcoin in the long run,” the strategists wrote on Monday. However, a convergence in volatility between Bitcoin and gold is unlikely to happen quickly and is, in our view, a multi-year process. This implies that the $ 146,000 theoretical Bitcoin target should be considered a long-term target, and therefore an unsustainable price target for this year. ”
Bitcoin slipped to 17% on Monday, the biggest drop since March, after hitting $ 34,000 for the first time over the weekend. The swings are a reminder of the well-known volatility of the largest cryptocurrency, the price of which has more than tripled in recent years.
More settings and noticed investors, from Paul Tudor Jones to Scott Minerd and Stan Druckenmiller, have either started allocating money in Bitcoin, or have said they are open to it. While some argue that the cryptocurrency provides a hedge against dollar weakness and inflation risk in a world flooded with fiscal and monetary stimulus, others say retail investors and the next quarterly funds are fueling an unsustainable bubble.
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For now, JPMorgan sees headwinds for the largest cryptocurrency, with indicators such as a build-up of speculative long positions and an increase in investment portfolios with small amounts of Bitcoin showing potential foam.
“The valuation and position background became a challenge for Bitcoin at the beginning of the new year,” the strategists wrote. “While we can not rule out the possibility that the current speculative mania will expand further to push the Bitcoin price to the consensus range of between $ 50,000 and $ 100,000, we believe such price levels will be unsustainable.”
Bitcoin rose 3.3% in Tokyo from 12:40 to $ 32,056, while the broader Bloomberg Galaxy Crypto Index rose about 1.8%.
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