© Reuters. JP Morgan: The emergence of Bitcoin as “digital gold” could raise its price to $ 146,000
LONDON (Reuters) – Investment bank JP Morgan said on Tuesday that the digital currency has emerged as a competitor to gold and could trade as high as $ 146,000 if it consolidates its position as a safe investment asset.
Interest in the world’s largest cryptocurrency has increased in the new year as investors view Bitcoin as a hedge against inflation and an alternative to the depreciation of the dollar. The buyout has pushed up Bitcoin prices more than three-fold in the past six months to a record high of $ 34,800 on January 2.
“We are already beginning to consider a competition with Bitcoin for gold,” JP Morgan economists said in a note, pointing to $ 7 billion in outflows from and more than $ 3 billion in inflows into the Gray Scale Bitcoin Trust.
This could herald a new dawn for the volatile digital currency, after its circulation for years was restricted to speculators and retail investors.
“Given the amount of financial investment in gold, the displacement of gold as an ‘alternative’ currency means a significant rise for bitcoin in the long term,” said JP Morgan.
He added that Bitcoin is likely to outperform gold after the new millennial generation becomes, over time, a more important component of the investment market over time, given their preference for “digital gold” over traditional bullion.
The bank note added that with a market capitalization of $ 575 billion, Bitcoin’s price would need to jump nearly five-fold to $ 146,000 to trade the value of private gold in gold bars, coins, or ETFs.
Although JP Morgan sees the odds that this “current speculative mania” will push Bitcoin to between $ 50,000 and $ 100,000, he cautioned that these levels will turn out to be unsustainable until volatility levels stabilize.
“We note that the staggering rise of Bitcoin in the past few weeks has pushed Bitcoin into a region with more challenges, not only in terms of its status but also in terms of its value,” the bank said.
(Prepared by Mohamed Farag for the Arabic Bulletin – Edited by Wagdy Al-Alfi)