Bitcoin could reach nearly R2.2m in the long-term, says JPMorgan – but not everyone is a fan

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New York based investment bank JPMorgan Chase & Co estimates that Bitcoin could reach $146,000 (around R2,195,000 at the time of writing) in the long-term. In order for that to be achieved, Bloomberg says that the market capitalisation would ‘have to rise by 4.6 times’. Joanna Ossinger of Bloomberg reports that a number of noted investors have ‘either started allocating funds into Bitcoin or have said they’re open to doing so’. However, there are those who remain sceptical when it comes to the cryptocurrency. American economist Nouriel Roubini took to Twitter to express his thoughts on the hotly contested ‘pseudo asset’. See beneath the article for ‘Dr Doom’s’ tweets. – Jarryd Neves

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JPMorgan says Bitcoin could surge to $146,000 in long term

By Joanna Ossinger

(Bloomberg) – Bitcoin has the potential to reach $146,000 (approx. R2,195,000) in the long term as it competes with gold as an asset class, according to JPMorgan Chase & Co.

Bitcoin’s market capitalisation of around $575bn would have to rise by 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. But that outlook depends on the volatility of Bitcoin converging with that of gold to encourage more institutional investment, a process that will take some time, they said.

“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.”

Bitcoin rose 1.7% to $31,567 (approx. R474,000)  as of 10:31 am in London. The wider Bloomberg Galaxy Crypto Index added 0.9%.

Bitcoin

On Monday, Bitcoin slid as much as 17%, the biggest drop since March, after breaching $34,000 (approx. R510,000) for the first time over the weekend. The swings are a reminder of the famed volatility of the largest cryptocurrency, whose price has more than quadrupled over the past year.

More institutions and noted investors, from Paul Tudor Jones to Scott Minerd and Stan Druckenmiller, have either started allocating funds into Bitcoin or have said they’re open to doing so. While some argue that the cryptocurrency offers a hedge against dollar weakness and inflation risk in a world awash with fiscal and monetary stimulus, others say retail investors and trend-following quant funds are pumping up an unsustainable bubble.

For now, JPMorgan sees headwinds for the largest cryptocurrency, with indicators like a buildup of speculative long positions and an increase in investment wallets holding small amounts of Bitcoin showing potential froth.

“The valuation and position backdrop has become a lot more challenging for Bitcoin at the beginning of the New Year,” the strategists wrote. “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 (R750,000 – R1,500,000), we believe that such price levels would prove unsustainable.”

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