JP Morgan, the global investment bank has increased its price projection for bitcoin to $146,000. The bank’s analyst added that the cryptocurrency’s value might achieve that level if its volatility decreases and investment banks begin to prioritize bitcoin over gold in their holdings.
Last week, JP Morgan released the first research in its new publication, which focuses on the forecast for alternative investments, including digital assets. Every two to three months, a new report will be produced.
According to the bank’s researcher Nikolaos Panigirtzoglou, bitcoin’s long-term price might reach $146K, with a short-term price prediction of $73,000 for 2022.
Nikolaos stated that cryptos are on a multi-year fundamental rise but the present entry position appears unappealing in his perspective for a 12-month investment period since bitcoin seems to have reverted to an overvalued position.
The re-emergence of inflation fears by investors in September 2021 seems to have rekindled interest in the use of bitcoin as a hedge against inflation. The JP Morgan analyst stated in October:
“Bitcoin’s attraction as a hedge against inflation may have been increased by gold’s lack of response in recent weeks to increased inflationary concerns.”
Panigirtzoglou anticipates bitcoin’s rivalry with gold to persist, particularly as more youngsters engage in cryptocurrencies. Given the size of financial investment in gold, any such crowd out of gold as an ‘alternative’ commodity indicates significant long-term potential for bitcoin.
But, Panigirtzoglou believes that in order for the $146,000 price estimate to come good, bitcoin’s volatility must diminish enough so that rule-bound traders feel more comfortable including the cryptocurrency to their holdings.
He pointed out that Bitcoin’s volatility is presently four to 5 times higher than that of gold. According to the analysis, the present volatility is so severe that bitcoin’s pricing is actually approximately $35,000.
Nonetheless, the bank observed that bitcoin’s volatility is decreasing and that a price estimate of $73,000 is reasonable for 2022. Furthermore, Panigirtzoglou stated that bitcoin is highly volatile, with both a spike beyond $146,000 and a drop below $30,000 being likely.
According to Nikolaos, there seems to be little doubt that virtual currencies and digital assets more widely represent an emergent asset class and hence on a multi-year fundamental rise. He continued describing:
“Following the global epidemic, digital assets have appeared as an obvious winner, with individual investors uniting investment firms such as family offices, fund managers, and real money asset managers including insurance firms in spreading the asset class.”
This wasn’t the first instance JP Morgan has forecast that bitcoin’s price will soar to $146,000. The bank previously announced this audacious long-term target price for bitcoin in January, noting bitcoin’s competition with gold as an alternative currency.
The bank noted the market valuation of bitcoin, which is currently $575 billion, would have to expand by x4.6 from here, meaning a possible price of bitcoin approaching $146K, to exceed the total private investment in gold through ETFs or bars and coins.
According to JP Morgan the view of bitcoin as a superior inflation hedge than gold is the main cause for the present surge, prompting a shift away from gold ETFs and into bitcoin funds since September. Furthermore, institutional investors are abandoning gold in favor of bitcoin, viewing it as a stronger hedge against inflation.
However, JP Morgan CEO Jamie Dimon continues to be dubious of bitcoin. In October, he declared Bitcoin to be worthless and queried its scarcity. He also stated that bitcoin has no intrinsic worth and that authorities will regulate it to death.
In May, JP Morgan CEO Jamie Dimon personally encouraged investors to avoid cryptocurrency. Dimon stated that he is uninterested in bitcoin, but his investors are. However, the firm’s investors see cryptocurrency as an asset class in which they wish to invest, as well as the bank is now providing a variety of crypto assets to clients.