JPMorgan has once again given an insight into digital assets. The Wall Street giant has reaffirmed its earlier analysis that Bitcoin could rise to $146,000 in the long term. However, it has given exceptions for this, stating that this will only happen if volatility drops.
JPMorgan also noted that such highs will easily be reached if institutional investors prefer the primary cryptocurrency to Bitcoin.
Bitcoin as a hedge against inflation
Nikolaos Panigirtzoglou, a JPMorgan strategist, stated that inflation concerns in September and October had renewed investor interest in Bitcoin; hence many people were now using the asset as an inflation hedge.
“Bitcoin’s allure as an inflation hedge has perhaps been strengthened by the failure of gold to respond in recent weeks to heightened concerns over inflation,” he noted. The inflation rate is currently high in the US, as it is standing at a 13-year high. The same is also being witnessed globally.
The JPMorgan strategist also added that Bitcoin will continue competing with gold, and it could even have a competitive edge, given that Millennials are now joining the investments sector, and they prefer this coin to gold.
Bitcoin will only reach $146,000 if volatility drops
He also noted that Bitcoin could reach a long-time price target of $146,000. However, he noted that the only condition for such a price to be met was reduced volatility. If Bitcoin’s volatility dropped, the coin could attract more investors to add it into their portfolios.
The analyst noted that the volatility for gold was around four or five times higher compared to gold’s volatility. Therefore, for investors to ditch gold and choose Bitcoin, its volatility needed to drop.
JPMorgan has stated that the volatility of Bitcoin was a major problem and that the fair value of the primary cryptocurrency was around $35,000. The bank also notes that this volatility has dropped with time, and Bitcoin could reach $73,000 in 2022. However, due to this volatility, the coin could also drop below $30K.
“There is little doubt that cryptocurrencies and digital assets more broadly are an emerging asset class and thus on a multi-year structural uptrend,” the JPMorgan strategists noted.
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