published on 05/01/2021 at 14h30
(Boursier.com) – He was all we talked about between Christmas and New Year’s Eve. We’re not talking about turkey, foie gras or champagne here, but Bitcoin. It must be said that the queen of the crypto-currencies had a spectacular rise between the end of December and the beginning of January, even crossing the 34,000 dollar mark! The soufflé has since fallen back slightly but, for many observers, this pause is only logical, and Bitcoin’s upward phase should not be long in resuming.
While some famous unknowns have been delivering more or less exuberant forecasts on the cryptos market for several years, some big names on Wall Street no longer hesitate to unveil studies on the subject. This is another sign of the growing importance of the digital currency market.
One of the latest notes unveiled by JP Morgan has been the talk of the trading floor since Monday. The investment bank claims that Bitcoin could reach $146,000 in the long term as the currency develops as an alternative currency to gold. But to reach such a level, JPM warns that Bitcoin will first have to see its volatility drop sharply as the market capitalization of the cryto, calculated by multiplying its price by the total number of Bitcoin in circulation, currently stands at more than $575 billion, far from the $2.7 trillion of private investments in gold (ETFs, bullion…).
« This long-term increase, based on an equalization of the market capitalization of Bitcoin with that of gold (for investment purposes) is conditioned by the convergence of Bitcoin’s volatility with that of gold over the long term, » say JP Morgan’s strategists. « The reason is that for most institutional investors, the volatility of each class is very important in terms of portfolio risk management, and the higher the volatility of an asset class, the higher the risk capital consumed by that asset class ».
You don’t have to go back very far to see that Bitcoin’s volatility remains very high. Despite the euphoria surrounding the currency, the star cryptos saw its value drop 17% on Monday alone… For the New York bank’s specialists, Bitcoin has very little, if any, chance of reaching such a level in the short term. « A convergence of volatilities between Bitcoin and gold is unlikely to occur quickly and is in our view a multi-year process. This implies that the theoretical target of $146,000 should be considered as a long-term threshold, and therefore an unsustainable price target for this year ».