Bitcoin Experiencing A Modern Day Gold Rush As JPMorgan Predicts A Surge To $146K Valuation
Bitcoin continues to reach new heights, climbing to nearly $40,000 at the time of this writing (after reaching $20,000 a month ago), and who knows where it will stop. In the short term, maybe it reaches $50,000 by the end of the month. Looking down the road, however, at least one investment bank believes it could eventually climb to a staggering $146,000, putting it in contention with gold.
In a sense, Bitcoin has become the modern day gold rush, only instead of mining dirt, savvy users dig it up on PCs and specialized ASIC hardware. Some choose to mine other forms of cryptocurrency and trade it for Bitcoin, while others simply invest real currency into the ballooning digital currency. And they are all being rewarded.
The recent rise, however, could be just the tip of a very big iceberg. In a note to investors, JPMorgan Chase & Co. said Bitcoin could rise see a 4.6-fold increase in its current $575B market cap by rising to $146,000, which would equal the combined private sector investment in gold, Bloomberg reports.
"A crowding out of gold as an ‘alternative’ currency implies big upside for Bitcoin over the long term," JPMorgan wrote. The firm added that "a convergence in volatilities between Bitcoin and gold is unlikely to happen quickly and is in our mind a multiyear process. This implies that the above-$146,000 theoretical Bitcoin price target should be considered as a long-term target, and thus an unsustainable price target for this year."
So from JPMorgan's perspective, while Bitcoin probably won't hit $146,000 in 2021, it very well could skyrocket that high in a few years. Whether that actually happens, however, is impossible to know. Cryptocurrencies are highly volatile. One thing that is possibly working in Bitcoin's favor is name recognition—most people have probably at least heard of Bitcoin, even if they do not understand what exactly it is, or how cryptocurrency works.
Bitcoin is by far the most popular cryptocurrency, though it is not the only one. With the recent rise to nearly $40,000 in value, the combined cryptocurrency market is now worth more than $1 trillion. That's around half the market cap of Apple, and around $330 million more than Facebook, to put the figure into perspective.
Part of Bitcoin's rise can be attributed to company's like PayPal and Fidelity warming up to the cryptocurrency. PayPal last year launched a service to enable accepting cryptocurrency payments, and Fidelity last summer launched its first Bitcoin fund. Moves like those have helped Bitcoin inch out of fringe territory, and perhaps to take on gold. We shall see.