Investment banking giant JPMorgan has called a long-term bitcoin price target of over $146,000 based on the assumption that the cryptocurrency will grow in popularity as an alternative to gold, Bloomberg reports.
"A crowding out of gold as an 'alternative' currency implies big upside for bitcoin over the long term," strategists led by Nikolaos Panigirtzoglou wrote in a note on Monday. "Bitcoin's [current] market capitalization of around $575 billion would have to rise by 4.6 times – for a theoretical bitcoin price of $146,000 – to match the total private sector investment in gold via exchange-traded funds or bars and coins."
However, analysts argued that bitcoin's price volatility needs to drop for institutions to make large allocations. The convergence of bitcoin and gold volatilities is a "multi-year process" and suggests that the $146,000-plus target is a long-term objective, JPMorgan noted.
Bitcoin rallied by 300% to $29,000 in 2020 and extended gains to a new record price of $34,420 in the first three days of the new year. The cryptocurrency has gained over 160% in the last three months alone, helped along by increased institutional participation.
While the crypto community expects the rally to continue, JPMorgan sees signs of "speculative mania" and believes further big gains towards the region of $50,000-$100,000 may be unsustainable in the near term.
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