JPMorgan published a new deep dive into digital assets, renewing its prediction that bitcoin could surge to $146,000 in the long term.
According to its latest predictions, the cryptocurrency’s value could increase approximately 130% above its current price, which is around $63,000 today, if volatility decreases and it gains competitiveness against gold among institutions.
In January, the largest US bank made headlines after giving bitcoin the same theoretical target price, stating that the digital currency’s value could reach that sum while competing with gold as an alternative currency.
JPMorgan strategist Nikolaos Panigirtzoglou said: “The re-emergence of inflation concerns among investors during September/October 2021 appears to have renewed interest in the usage of bitcoin as an inflation hedge.”
Panigirtzoglou explained that Bitcoin’s allure as an inflation hedge might have been reinforced by gold’s lack of response to growing concerns about inflation. This year, inflation has risen worldwide, reaching a 13-year high in the United States.
As millennials, who have a preference for cryptocurrencies, become more powerful in the investment universe, there is “little doubt” that bitcoin’s competition against gold will continue, Panigirtzoglou added.
JPMorgan’s strategist also stated that any gold crowding out as an “alternative” currency implies a great upside for the token in the long term.
However, bitcoin’s huge volatility would have to drop drastically, leading rules-bound and institutional investors to feel more comfortable adding bitcoin to their portfolios, to reach $146,000. The cryptocurrency’s volatility is four to five times higher than gold, the bank said.
JPMorgan explained that such volatility is the biggest obstacle to sustainable rises in bitcoin price, as its reputation among prominent investors was affected by April and May’s boom and bust. Back then, its price fell as low as $30,000 following a huge cryptocurrency sell-off in response to China’s ban on digital assets as payment options.
The bank described bitcoin as “unpredictable.” Although a rise above $146,000 seems entirely possible, as bitcoin gained more than 340% last year, a fall to less than $30,000 as seen during summer is another possibility, JPMorgan argued.
