One bitcoin could eventually be worth $146,000 if the cryptocurrency’s volatility can converge with that of gold, and investors embrace it as an asset class, according to JPMorgan Chase & Co.
Bitcoin’s market cap — about $575 billion — would have to multiply 4.6 times for a theoretical price of $146,000 to match the total private sector investment in gold via exchange-traded funds or bars and coins, strategists led by Nikolaos Panigirtzoglou wrote in a note, according to Bloomberg.
But that would depend on the volatility of bitcoin converging with that of gold to encourage more institutional investment, a process that will take some time, they said.
It won’t happen overnight, or at least not this year.
“A crowding out of gold as an ‘alternative’ currency implies big upside for Bitcoin over the long term,” the strategists wrote Monday. However, “a convergence in volatilities between Bitcoin and gold is unlikely to happen quickly and is in our mind a multiyear process. This implies that the above-$146,000 theoretical Bitcoin price target should be considered as a long-term target, and thus an unsustainable price target for this year.”
Institutional investors such as hedge fund manager Anthony Scaramucci’s Skybridge Capital are buying into the growing narrative that bitcoin represents a form of “digital gold.”
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Scaramucci famously served for 10 days as the White House director of communications (from July 21 to July 31, 2017). He worked at Goldman Sachs between 1989 and 1996 in its investment banking, equities, and private wealth management divisions.
“We @SkyBridge entered the #bitcoin market in Nov/Dec with a now ~$300mm position, and today launched a #bitcoin fund offering for accredited investors,” Scaramucci tweeted on Jan. 4. “We believe we’re in the early innings of a new asset class with tremendous upside.”
JP Morgan is not alone in predicting a six-figure bitcoin price.
“Rich Dad, Poor Dad” author Robert Kiyosaki said the U.S. economy is dying. In a May 16 tweet, he said he’d bought “more of three assets that he ostensibly considers valuable outside of the traditional financial system: Gold, Silver, and Bitcoin.” He predicted that bitcoin’s price will rise nearly 100 percent per year over the next three years to $75,000.
TV host Max Keiser predicted in March that the coronavirus outbreak would send financial markets down to crisis levels and the bitcoin price would skyrocket to $400,000. Bitcoin was trading at around $5,800 at the time.
Pantera Capital Founder and CEO Dan Morehead was bullish on bitcoin in a letter to investors in April. “If history were to repeat itself, Bitcoin would peak in August 2021 — at $533,431,” he said. “Just sayin’ that there’s more than a 50-50 chance Bitcoin goes up — and goes up big.”
Not everyone is bullish on bitcoin.
Legendary investor Jim Rogers, who with billionaire investor George Soros built one of the most successful hedge funds of its day, predicted that bitcoin’s price will go to zero. “Bitcoin is not an investment. It’s gambling, and the government will never allow it to be used as money because cryptocurrencies are beyond the government’s control,” Rogers said in a June, 2020 interview published in Aera dot with Asahi Shimbun Singapore branch manager Koji Nishimura.
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That was before PayPal‘s October announcement that it will allow customers and the 26 million merchants on its network to buy, sell and shop using bitcoin and other virtual coins in its online wallet.
Also in October, Jack Dorsey’s payments company Square put 1 percent of its total assets in bitcoin with a $50 million investment — a “strong vote of confidence” for the cryptocurrency, JPMorgan strategists said.
Famously volatile, bitcoin reached $34,400 for the first time over the weekend, then fell as much as 17 percent on Monday — the biggest drop since March. The price of bitcoin more than quadrupled over the past year.
“While we cannot exclude the possibility that the current speculative mania will propagate further pushing the Bitcoin price up toward the consensus region of between $50,000-$100,000, we believe that such price levels would prove unsustainable,” JP Morgan strategists wrote.
Read more: 5 Things To Know About Bitcoin’s Risky Correlation With Big Tech, Risk Assets And The Stock Market