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- JPMorgan presents a bullish outlook for Bitcoin as BTC gains importance as version 2.0 of gold.
- Bitcoin market capitalization must increase 10 times to match that of gold.
Bitcoin seems to be following a similar upward trajectory to that of 2017, when it reached an all-time high in price at $20,000. Currently, the first cryptocurrency by market capitalization is registering gains of almost 80% year to date. Outperforming gold and the traditional market. Institutions have taken note and BTC adoption levels seem to be at a record.
A note from JPMorgan to its clients, according to a Business Insider report, poses a scenario of higher profits for Bitcoin as it consolidates itself as a digital version of gold. Under this premise, companies like Square and MicroStrategy have made Bitcoin part of their strategy to mitigate the effects of the U.S. Federal Reserve’s measures and protect themselves from inflation in the U.S. dollar. JPMorgan says:
The potential long-term upside for bitcoin is considerable as it competes more intensely with gold as an ‘alternative’ currency we believe, given that Millenials would become over time a more important component of investors’ universe.
Millennials will drive Bitcoin to new highs
JPMorgan still considers Bitcoin to be a nascent asset. In that sense, it believes that the market capitalization of the cryptocurrency is small compared to that of gold. With $2.6 trillion in market cap for the physical gold market, Bitcoin is almost 10 times smaller and records about $240 billion in market cap.
This could change when “millennials” become more important in the market. A report from the exchange Kraken states that this will happen within the next 10 years. At least 1% of the $68 trillion the millennials will inherit will go to emerging technologies. In that regard, JPMorgan adds the following:
Even a modest crowding out of gold as an ‘alternative’ currency over the longer term would imply doubling or tripling of the bitcoin price.
The banking institution recognizes that Bitcoin could become more than just a new version of gold. This will be underpinned by the level of adoption that cryptocurrencies will have in the coming years. Many more traders could accept them as a medium of exchange (MoE). PayPal’s announcement of adding cryptocurrencies to its services is destined to play an important role in that regard. JPMorgan says:
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.
JPMorgan’s bullish predictions are particularly interesting because of the public stance the bank has taken towards BTC. Three years ago, JPMorgan CEO Jamie Dimon said he was not interested in Bitcoin and classified it as an irrelevant asset. Time has forced the bank to change its position. In the future, JPMorgan may be among the institutions that adopt “the Bitcoin standard” and add it to their financial reserves.
