Bitcoin’s value has risen dramatically after the onset of the COVID-19 disease outbreak in late 2020. Bitcoin’s value soared to over $60,000, a new record peak, after months of expanded institutional funding. When the price fell below $60,000 for a brief while, there were fears that another bear market would emerge, similar to the one that followed the huge bull cycle of 2017.
The bitcoin price has been relatively steady so far, and as per a recent JPMorgan report, this value stability would make the cryptocurrency more appealing to institutional investors.
JPMorgan’s Opinion on Bitcoin
According to the investors’ notice, investors seeking to diversify their portfolio can consider bitcoin appealing. These buyers might have been put off by bitcoin’s infamous fluctuations in the past, however now that the market seems to have settled, further acceptance is probable.
Since then, buyers appear to have taken the offer, as the bitcoin market has seen more competitors than ever before. Other commodities, such as gold, have seen a decline in market interest as they shift their focus to virtual currencies. Gold has shown a $20 billion outflow since October, relative to a $7 billion inflow into the digital currency market.
“Considering how big the financial investment into gold is, any such crowding out of gold as an ‘alternative’ currency implies big upside for bitcoin over the long term,” the note says.
With a steady market of $50,000, investors are already aiming to a value of $130,000, which JPMorgan claims is a realistic prospect if those conditions are fulfilled.
“Mechanically, the bitcoin price would have to rise [to] $130,000, to match the total private sector investment in gold. The decline in the gold price since then has mechanically reduced the estimated upside potential for bitcoin as a digital alternative to traditional gold, assuming an equalization with the portfolio weight of gold,” the note says.
The volatility of bitcoin must align with that of gold for this transition to occur. Bitcoin’s 3-month volatility is 86 percent, compared to 16 percent for gold. As a result, the $130,000 value point will be a multi-year phase and a lengthy price target, according to the document.