Bitcoin (BTC) and gold: The two are often compared in terms of the store of value. Both assets can be used to store value. Bitcoin is easier to transport and sell, but its price is more volatile. Gold is the traditional save haven, but not as dynamic as Bitcoin. The picture shows a Bitcoin in front of gold pieces.
Investment banking giant JPMorgan has given a long-term Bitcoin price forecast of over $146,000. This price target for BTC is based on the now widely held belief that the leading cryptocurrency will gain popularity as an alternative to gold.
Strategists led by Nikolaos Panigirtzoglou wrote in a note on Monday:
Displacing gold as an ‚alternative‘ currency implies a large upside potential for Bitcoin in the long run. Bitcoin’s [current] market capitalisation of around $575 billion would need to increase 4.6-fold – at a theoretical Bitcoin price of $146,000 – to match Bitcoin Lifestyle review total private sector investment in gold via exchange-traded funds or bars and coins.
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Bitcoin-gold ratio sees a new high. Source: Bloomberg.
However, analysts argued that bitcoin’s price volatility needs to fall for institutions to make large allocations. The convergence of bitcoin and gold volatility is a „multi-year process“ and suggests that the $146,000-plus target is a long-term goal, according to JPMorgan.
A short-term bitcoin price of $50,000 – $100,000 is not sustainable, it said
The Bitcoin price surged 300% to $29,000 in 2020 and extended its gains to a new record price of $34,420 in the first three days of the new year. The cryptocurrency has gained more than 160% in the last three months alone, helped by increased institutional participation.
While the crypto community expects the rally to continue, JPMorgan sees signs of „speculative mania“ and believes further large gains towards the $50,000-$100,000 region may not be sustainable in the near term.
Nevertheless, even former die-hard Bitcoin opponents seem to increasingly agree that BTC will more strongly substitute gold in the future. This would of course give the Bitcoin price immense upside potential in the long run.
Nikolaos Panigirtzoglou, the analyst at JPMorgan, already drew attention to himself in mid-December when he published that a paradigm shift in the investment policy of large institutions and family offices is imminent. According to him, the growing acceptance of Bitcoin is increasingly leading institutional investors to invest part of their portfolios in Bitcoin. This, however, is happening to the detriment of gold, as the allocation to the precious metal is decreasing.
Literally, the JPMorgan analyst said:
The adoption of Bitcoin by institutional investors has only just begun. For gold, on the other hand, adoption is well advanced. If my assumption is correct in the medium to long term, the gold price would suffer massively from this changeover.