| Peter Wind

Key highlights:

  • In a note, analysts at JPMorgan say Bitcoin has the potential to reach a price tag of $146,000 over the long terms
  • The analysts reached this figure by comparing Bitcoin’s current market cap to the total private investments in gold ($2.7 trillion)
  • However, the note says that Bitcoin’s volatility will have to come closer to gold’s volatility for such price levels to be realistic

JPMorgan analysts says Bitcoin can reach $146K over the long term

Analysts at JPMorgan say that Bitcoin could reach as high as $146,000 over the longer term, according to a note cited by Bloomberg. The analysts said that Bitcoin is likely to continue competing against gold, and the trend will become more apparent as millenials, who tend to prefer Bitcoin as »digital gold« over actual gold, become a larger part of the investment world.

The note points out that more than $7 billion has flowed out of gold ETFs since October, while the Grayscale Bitcoin Trust saw $3 billion in inflows.

The JPMorgan analysts arrived at the $146,000 figure by comparing Bitcoin’s current market cap to the estimated $2.7 trillion of private investment in gold through physical gold and exchange-traded funds. In order for Bitcoin to reach a $2.7 trillion market cap, 1 BTC would have to be trading at $146,000. 

However, the analysts did note that the volatility of Bitcoin would have to converge closer to the volatility of gold (i.e. decrease) before institutional investors would be comfortable making allocations large enough for Bitcoin to reach $146,000.

»But this long term upside based on an equalization of the market cap of bitcoin to that of gold for investment purposes is conditional on the volatility of bitcoin converging to that of gold over the long term.«

As far as Bitcoin’s more short-term prospects are concerned, the JPMorgan analysts say that justifying Bitcoin’s current valuation has become more difficult since the New Year, and that price levels between $50,000 and $100,000 would likely be unsustainable:

»While we cannot exclude the possibility that the current speculative mania will propagate further, pushing the bitcoin price up towards the consensus region of between $50k-$100k, we believe that such price levels would prove unsustainable.«

Bitcoin has gained close to 20% in the last week alone, and crossed $30,000 for the first time ever on January 2. At BTC’s current price of just under $32,000, Bitcoin’s market capitalization sits at $595 billion. 

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