Strategists at the American megabank believe the cryptocurrency has a
chance to hit $146,000 in future years if it can evolve into a
compelling alternative to gold.
Drawing parallels between Bitcoin (BTC)
and gold's role as a hedge for investors has been popular for years.
Until now, the stark discrepancy in the total market capitalizations of
the two assets has limited these analogies to a significant extent.
Gold, even after a major Bitcoin price rise in Dec. 2020, continues to
command roughly 4.6 times Bitcoin's current $5.85 billion market capitalization.
Yet
strategists at the American multinational megabank JPMorgan Chase are
forecasting a possible scenario in which Bitcoin can seriously take on
its predecessor. On Jan. 5, a Bloomberg report
cited a note from the bank's strategists, led by Nikolaos
Panigirtzoglou, in which they sketched out a path to the total private
sector investment in Bitcoin coming to equal the value that is currently
invested in gold via either exchange-traded funds or bars and coins.
Yet
such a path crucially depends on Bitcoin's volatility converging with
that of the precious metal, they stressed, and that is likely to take
some time:
“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, Bitcoin has weathered a couple of days of choppy and highly
volatile price action, with a brief dive down to $27,700 on Jan. 4
followed by a bounce to almost $30,000. As of press time, the coin is
trading closer to $31,5000. Yesterday's plummet was the starkest since the coin recovered the $20,000 price point in December 2020.
Amid
this backdrop of persistent volatility, the JPMorgan strategists
nonetheless identified strong positive signs for the cryptocurrency —
pointing to an accumulation of speculative long positions — yet warned
that reading the investment landscape in the medium-term remains
difficult:
“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 Jan. 1, Bitcoin reached an all-time-high against gold,
surpassing its previous peak back during the winter 2017 bull market.
In December of last year, the same team of strategists led
by Panigirtzoglou was already suggesting that Bitcoin could eat into
gold's market share in the future, envisioning a major shift in
institutional allocation towards the cryptocurrency.
Meanwhile,
an eventful trading climate has caused volumes on major cryptocurrency
exchanges to hit record highs. On Jan. 4, Binance, the world’s largest
crypto exchange by trade volume, reported an all-time-high of $80
billion in 24-hour trade activity. "To put this in perspective, from Nov
15, 2017 to Dec 15, 2017, the month leading up to the ATH
[all-time-high] in 2017, Binance did $20 billion in trading volume in 1
month," the exchange's CEO wrote on Twitter.
Equally unprecedented, however, was futures traders' loss of a total of $190 million on Binance alone in just one hour, the largest value of a mass liquidation to date on the platform.
source link : https://cointelegraph.com/news/bitcoin-could-hit-146k-long-term-by-crowding-out-gold-says-jpmorgan
