Reuters / Dado Ruvic
- Bitcoin has a “sizable” long-term upside as it competes better with gold as an alternative currency, JPMorgan said in a statement Friday.
- With millennials set to become a more important market participant in the coming decades, their preference for bitcoin over gold should set the cryptocurrency for success, according to JPMorgan.
- But bitcoin still represents only a paltry sum of the gold market and the cryptocurrency would have to rise 10x from current levels to equal the same value as the physical gold market.
- “Even a modest crowding of gold as a long-term ‘alternative’ currency would mean doubling or triple the price of bitcoin from here,” JPMorgan said.
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Bitcoin’s 2020 surge may be set to continue as the digital cryptocurrency competes better with gold as an “alternative” currency, JPMorgan said in a statement Friday.
Bitcoin has grown more than 70% year to date, and this week’s announcement that PayPal would allow its users to buy, sell and trade the asset served as another high-level endorsement for the cryptocurrency.
Earlier this month, Square bought $ 50 million worth of bitcoin as it further commits to viewing the digital currency as a long-term investment.
But bitcoin is still a relatively small asset class, and is mostly favored by millennial investors who are not as influential in the market as previous generations who are predominantly into physical gold.
According to JPMorgan, the physical gold market is worth $ 2.6 trillion, which includes assets held within gold ETFs.
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In order for bitcoin to reach gold in terms of market value, the cryptocurrency would have to rise 10 times from current levels.
“Even a modest crowding of gold as a long-term ‘alternative’ currency would mean doubling or triple the price of bitcoin,” JPMorgan said.
And over time, according to JPMorgan, cryptocurrencies could be held for other reasons besides being a deposit of wealth like gold.
“Cryptocurrencies gain value not only because they serve as deposits of wealth, but also because of their usefulness as a means of payment. The more economic agents accept cryptocurrencies as a means of payment in the future, the greater their usefulness and value,” he explained. JPMorgan.
Simply put, the risk is on the upside for bitcoin.
“The long-term upside potential for bitcoin is considerable as it competes more intensely with gold as an ‘alternative’ currency, we believe, as Millennials would become a more important component of the investor universe over time,” concluded JPMorgan.
The technical data also points to a continuing wave of bitcoin. According to technical strategist Katie Stockton, the cryptocurrency could rise to $ 14,000 as short-term momentum improves.
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