JPMorgan published a huge long-term prediction for bitcoin on Monday. They are claiming that the super-hot asset could rise as high as $146,000 as it takes on gold as an “alternative” to the dollar. But, there’s one small catch.
Bitcoin’s market cap — which you get by multiplying the price by the total number of coins — is currently more than $575 billion. And JPMorgan says it will have to increase by 4.6 times to go toe-to-toe with gold’s $2.7 trillion market.
They also say for bitcoin’s value to reach that incredible level, its volatility needs to drop by a huge amount to give big investors the confidence to make large investments. Bitcoin’s significant volatility showed up again on Monday when it dipped below $30,000 just days after hitting that level. But it was up 1% in the past 24 hours on Tuesday, trading around $31,720.
“This long term upside prediction assumes the volatility of bitcoin levels out to that of gold,” JPMorgan’s strategists announced.
“For the majority of very large investors, the volatility of each investment matters in terms of risk management. The greater the volatility of an asset, the greater the capital taken up by that asset.”
Meanwhile, Crypto fans say bitcoin’s current rally is completely different than 2017’s bubble, when bitcoin zoomed close to $20,000, only to catapult down to $3,122 the next year. That’s because larger investors are starting to get on board, and this is a vital confidence booster.
Skeptics see bitcoin’s 2020 increase — where it advanced over 300% — as similar to the sketchy 2017 market. They view it as a speculative investment with no underlying value and see a bubble likely to explode at any point.
But JPMorgan claims there’s “very little doubt that the flow of larger investors into bitcoin is the one thing that separates 2020 from 2017.”
“A leveling out of volatilities between gold and bitcoin is probably going to be a long-term process. This means the $146k price target should be seen as a long-term target.”
Numerous trans-national investors are utilizing vehicles like the “Bitcoin Trust” from Grayscale to invest in bitcoin. And JPMorgan claims that over $3 billion has flowed into this specific fund since October, while gold ETFs have lost $7 billion.
But skeptics are still abound. JPMorgan’s own CEO, Jamie Dimon, once said the cryptocurrency was a “fraud” and labeled bitcoin mania reminiscent of the 17th century tulip bulb craze.
Dimon, on the other hand, has supported bitcoin’s underlying blockchain technology. With JPMorgan even investing it’s own money into the space, creating its own digital currency known as the JPM Coin and creating a new division devoted to blockchain.