Bitcoin’s almost incessant climb to new records has attracted the attention of Wall Street like few other securities in recent memory.
The world’s number 1 digital asset recently traded at $ 32,000 at the last check, but the team of JPMorgan Chase JPM,
suggests the case that the cryptocurrency backed by blockchain could appreciate $ 146,000 in the not-too-distant future if it could continue to pull down demand from gold buyers, as the bank’s researchers think it is already happening.
The analysts point to outflows of gold-plated exchange-traded funds, or ETFs, and inflows into a digital currency trust sponsored by Grayscale, for example, as part of the evidence suggesting that the use of bitcoin as a gold-like security has increased. which would help drive the price further into the stratosphere.
“The competition of Bitcoin with gold has already started in our minds, as can be seen from the more than $ 3 [billion] of the inflow into the Grayscale Bitcoin Trust and the more than $ 7 billion outflow from Gold ETFs since mid-October, ”(see attached graph):
via JPMorgan
JPMorgan says that bitcoin currently consumes 3.4 times more risk capital than gold and more than 5 times more than the Grayscale Bitcoin Trust compared to GBTC,
the SPDR Gold Shares GLD,
the largest gold ETF by asset.
Bitcoin BTCUSD,
would currently have to increase by 4.6 times from the current market capitalization of about $ 575 billion – outstanding coins multiplied by price per unit – to imply a bitcoin price of $ 146,000 to total private sector investment in gold via ETFs or rods and coins, ”wrote JPMorgan’s strategic team, including Nikolaos Panigirtzoglou, Mika Inkinen and Nishant Poddar.
The researchers also said they expect interest in bitcoin to come primarily from younger investors.
Read: Advice: Bitcoin is heading for a shortage of stock – and it will continue to raise prices
“There is little doubt that this competition with gold as an ‘alternative’ currency will continue over the coming years, as millennials will eventually become a more important component of investors’ world and given their preference for ‘digital gold’ over traditional gold,” he wrote. the research team in the report dated Monday.
The one major obstacle to the rise of bitcoin and the price movement that is likely to make it fragile is its volatility.
“But this long-term upward basis, based on the comparison of the market capitalization of bitcoin with that of gold for investment purposes, is subject to the long-term convergence of bitcoin with that of gold,” the researchers write.
Investors are drawn to the narrative that bitcoin may have acted as wealth over the past year amid unbridled pressure on the central bank to bolster the economic recovery of the coronavirus pandemic.
PayPal PYPL,
recently allowed users on its platform to buy bitcoin, as well as other sister scripts such as Ethereum’s Ether coins ETHUSD,
Bitcoin Cash BCHUSD,
and Litecoin LTCUSD,
Square is SQ,
popular Cash app also allows users to buy and sell bitcoins.
Bitcoins enjoyed a remarkable run-up in 2020 compared to other assets. Bitcoins have risen 12% so far in 2021, compared to a 3% gain for GC00 gold price,
GOLD,
based on the most active gold futures contract, in January. Meanwhile, the Dow Jones Industrial Average DJIA,
the S&P 500 index SPX,
and the Nasdaq Composite COMP,
is all lower at this time of year.