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Bitcoin at $146,000? JPMorgan Thinks So

Bitcoin has the potential to reach $146,000 as institutional investors pad their portfolios with the cryptocurrency at the expense of gold, says JPMorgan.

Bitcoin holds the potential for significant additional gains over the long term, with the possibility of its price rising as high as $146,000 as institutional investors continue to pad their portfolios with the cryptocurrency at the expense of gold.

In a research note to clients, analysts at JPMorgan Chase predicted a long-term bitcoin price target of more than $146,000 based on the assumption that the cryptocurrency will grow in popularity as an alternative to gold, which has traditionally been used as an inflation and volatility hedge, as well as protection against a falling U.S. dollar.

“A crowding out of gold as an ‘alternative’ currency implies big upside for bitcoin over the long term,” wrote JPMorgan Chase strategists led by Nikolaos Panigirtzoglou. However, “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,” they said.

The price of bitcoin breached a record high of $34,000 this past weekend, quadruple its value at the start of 2020, amid ongoing demand from institutional investors, who have pivoted to including the traditionally volatile security in their investment portfolios.

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Bitcoin slid as much as 17% on Monday, its biggest drop since March. As of 9 a.m. ET Tuesday the price was $31,338.64, down 1.54%, according to CoinDesk.

By JPMorgan’s calculations, bitcoin’s total market capitalization would have to rise by another 4.6 times to match the total private sector investment in gold via exchange-traded funds or bars and coins. However, that forecast depends on the volatility of bitcoin converging with that of gold, something that will take quite some time, given how frothy bitcoin remains.

“While we cannot exclude the possibility that the current speculative mania will propagate further pushing the bitcoin price up toward the consensus region of between $50,000-$100,000, we believe that such price levels would prove unsustainable,” JPMorgan said, adding that bitcoin’s valuation and position backdrop “has become a lot more challenging” in 2021.

That said, cryptocurrency insiders including Flipside Crypto CEO Dave Balter also have attributed bitcoin's momentum to other factors, including the crypto exchange Coinbase's progress toward an initial public offering, Anthony Scaramucci's SkyBridge Capital's launch of a bitcoin fund, and words of confidence in the digital currency by advisers such as Ric Edelman.

The Grayscale Bitcoin Trust (GBTC) ended the trading day Monday up 9.63% at $35.08.