Major United States-based bank JPMorgan Chase suggested that Bitcoin’s (BTC) price could be heading much higher as it competes with gold as an “alternative” currency.
According to a Jan. 5 CNBC report, in a note published on Jan. 4 JPMorgan analysts suggested that Bitcoin could reach $146,000.
But, it added, that isn’t going to happen anytime soon.
Noting that Bitcoin’s total market capitalization is just over $575 billion, JPMorgan pointed out that it would need to grow 4.6 times in order to match gold’s $2.7 trillion value.
To do that, it will need to continue attracting large institutional investors. As the JPMorgan analysts pointed out, there’s “little doubt that the institutional flow impulse into Bitcoin is what distinguishes 2020 from 2017.”
But to continue to attract them, Bitcoin would have to become far less volatile than it is now, the note added.
Bitcoin’s ability to take on gold “is conditional on the volatility of bitcoin converging to that of gold over the long term,” the note said. “The reason is that, for most institutional investors, the volatility of each class matters in terms of portfolio risk management and the higher the volatility of an asset class, the higher the risk capital consumed by this asset class.”
Many Bitcoin boosters believe this will happen. As Modern Consensus reported in early December, Gemini cryptocurrency exchange co-founder Cameron Winklevoss is a strong believer that Bitcoin can compete against and beat gold, defining it as “Gold 2.0.” He predicted that BTC’s price would grow 25 to 30 times its current level.
The bank’s analysts said that such a “convergence in volatilities between Bitcoin and gold is unlikely to happen quickly,” calling it “a multi-year process.” The noted added:
“This implies that the above $146K theoretical Bitcoin price target should be considered as a long-term target, and thus an unsustainable price target for this year.”