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JP Morgan says bitcoin’s surge in 2020 is set to continue as digital cryptocurrency competes better with gold as an alternative currency. In a note, the financial institution says that with millennials set to become a more important market participant in the coming years, their preference for bitcoin over gold sets the cryptocurrency for future success.
The financial institution’s valuation comes as the digital currency continues to see increasing adoption by institutional investors and a hug from companies like payment giant Paypal.
According to a report, JP Morgan estimates that the “physical gold market is worth $ 2.6 trillion, which includes assets held within gold ETFs.” The financial giant infers that for bitcoin to reach the market value of gold, “the cryptocurrency would have to increase 10 times from current levels”.
At the time of writing, the market cap of bitcoin was $ 242.2 billion while the value of one BTC was just over $ 13,000.
Meanwhile, JP Morgan, whose CEO Jamie Dimon once labeled bitcoin a fraud, acknowledges in the note that “cryptocurrencies gain value not only because they serve as deposits of wealth, but also because of their usefulness as a means of payment.” .
The financial giant adds that since “the more economic agents accept cryptocurrencies as a means of payment in the future, the greater their usefulness and value”.
Although JP Morgan believes that new millennials will be the key to bitcoin’s future success, the growing adoption of bitcoin by large companies suggests that cryptocurrency could close the gap with gold much faster. Bitcoin has grown nearly 15% since Square announced its purchase of bitcoin on October 8. Immediately after the announcement of Paypal’s cryptocurrency, the digital currency broke the $ 13,000 mark.
However, with more companies expected to follow in the footsteps of Square and Paypal by acquiring and holding large amounts of bitcoin, the resulting supply tightening will continue to push the price higher.
What do you think of JP Morgan’s latest bitcoin valuation? Tell us what you think in the comments section below.
Image credits: Shutterstock, Pixabay, Wiki Commons
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