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JP Morgan: Bitcoin Could Become an Alternative to Gold in the Long Term

Experts at JP Morgan Chase believe that Bitcoin could reach $146,000 in the long-term. The strategists at the American financial firm think that the crypto-currency could, believe it or not, become an alternative to gold.

Gold has been a popular hedge against uncertainties for investors. The market cap of gold is about $10 trillion, while the Bitcoin market cap stood near $540 billion as we the clock ticked to 2021. 

Despite the stark differences in the market capitalization, financial strategists at JP Morgan are confident that Bitcoin can crowd out the precious metal to reach record highs in the coming years. They are predicting a possible situation where Bitcoin would become an alternative to gold as a hedge. 

Forecast about Bitcoin by JP Morgan Chase Analysts

A report published on Bloomberg on January 5 cited a forecast from strategists at JP Morgan that total private sector investment in gold would become equal to digital currency investment in the long run. 

However, the analysts’ prediction depends on the assumption that the volatility of Bitcoin will converge with the precious metal. According to financial experts, this convergence will likely take years, which means that the $146k target should be considered a long term target. 

Bitcoin has experienced highly volatile price movements in the past few months. The crypto-currency had dived to a low of $27,700 on January 4 this year before rising to $30,000. At the time of the writing, the value of the digital currency stood at $31,718.

The past few days have been an eventful trading session for major cryptocurrency exchanges. The speculative investment had pushed the values of digital currencies to record highs. 

Binance, the largest crypto exchange globally by volume, had reported a record high trading volume of $80 billion on January 4. In comparison, Binance had handled $20 billion investment volume in one month during the bull period between November 15 and December 15, 2015. Equally surprising was the $190 million losses on Binance in one hour, which was the largest mass liquidation on the platform. 

Positive Signs for Bitcoin 

Despite the volatility of Bitcoin, analysts at JP Morgan have identified positive signs that bode well for investors who hold Bitcoin for the long term. However, the experts also say that predicting the digital currency’s value in the medium term is difficult. 

According to the experts, the valuation of digital currency is difficult in the backdrop of high volatility at the start of 2021. They say that the current trend is expected to continue, which will push the crypto-currency value higher between $50,000 and $100,000. But they also caution that the high value will prove unsustainable during the short- and medium-term. 

Bitcoin value had reached a record high against gold. The crypto-currency valuation had surpassed the previous high during the bull season in winter 2017. 

In December last year, the experts at JP Morgan had also suggested that the virtual currency could capture the market share of gold in the future. They had predicted a shift in the institutional investment from the shiny yellow metal to digital currency. The trend seems to be continuing as we move into the New Year. We have to wait and see whether the prediction will come true regarding the virtual currency in the years ahead.  

References

  1. https://cointelegraph.com/news/bitcoin-could-hit-146k-long-term-by-crowding-out-gold-says-jpmorgan
  2. https://www.bloomberg.com/news/articles/2021-01-05/jpmorgan-sees-146-000-plus-bitcoin-price-as-long-term-target
  3. https://finance.yahoo.com/news/jpmorgan-sees-146-000-plus-034027776.html