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Tuesday, May 21, 2024

JPMorgan Sees Bitcoin Rising Up To Ten-Fold on Millennials Adoption

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JPMorgan, the $316 billion investment banking giant, said the potential long-term upside for Bitcoin (BTC) is “considerable.”

This new optimistic stance towards the dominant cryptocurrency comes after PayPal allowed its users to buy and sell crypto assets.

The main factor put forward by JPMorgan’s Global Markets Strategy division is Bitcoin’s competition with gold. The note, seen by MoneyCentral says :

“The potential long-term upside for bitcoin is considerable if it competes more intensely with gold as an ‘alternative’ currency we believe, given that Millennials would become over time a more important component of investors’ universe.”

The analysts also pinpointed the large valuation gap between Bitcoin and gold. At least $2.6 trillion is said to be stored in gold exchange-traded funds (ETFs) and bars. In contrast, the market capitalization of BTC remains at $240 billion.

JPMorgan’s note essentially emphasized three major reasons to support the long-term growth potential of Bitcoin.

First, Bitcoin has to rise 10 times to match the private sector’s gold investment. Second, cryptocurrencies have high utility. Third, BTC could appeal to millennials in the longer term.

“Mechnically, the market cap of bitcoin would have to rise 10 times from here to match the total private sector investment in gold via ETFs or bars and coins.”

One of the advantages Bitcoin has over gold is utility. Bitcoin is a blockchain network at its core. That means users can send BTC to one another on a public ledger, efficiently and practically. To transfer gold, there needs to be physical delivery, which becomes challenging.

As seen in many cold wallet transfers, it is easier to move $1 billion worth of capital on the Bitcoin blockchain than with physical gold. The bank’s analysts further explained:

“Cryptocurrencies derive value not only because they serve as stores of wealth but also due to their utility as means of payment. The more economic agents accept cryptocurrencies as a means of payment in the future, the higher their utility and value.”

Bitcoin is still at a nascent stage in terms of infrastructure, development, and mainstream adoption. Only 7 percent of Americans previously bought Bitcoin, according to a study.

Some major markets like Canada, also still lack a well-regulated exchange market. Large banks are yet to provide custody of crypto assets, and that gives Bitcoin a large room to grow in the next five to ten years.

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