Skip to content

JPMorgan is now betting on Bitcoin and names its “long-term bullish potential”

October 25, 2020

JPMorgan, the $ 316 billion investment banking giant, said Bitcoin’s long-term bullish potential (BTC) is “substantial”. This new bullish stance on the market leading cryptocurrency follows PayPal will announce that it will allow its users to buy and sell crypto assets within its platform.

The main factor planted by JPMorgan’s Global Markets Strategy Division It is Bitcoin’s competition with gold. The note, receive from Business Insider, He says:

“Bitcoin’s long-term upside is substantial if it competes more intensely with gold as an ‘alternative’ currency, as millennials would ultimately become a more important part of the investing universe.”

Analysts also noted the large valuation gap between Bitcoin and gold. It is at least believed that $ 2.6 trillion is stored in gold bars and exchange traded funds (ETFs). Vice versa, BTC’s market cap remains at $ 240 billion.

JPMorgan suggests three main reasons for a new BTC Bull Run

JPMorgan is now betting on Bitcoin and names its “long-term bullish potential”
JPMorgan is now betting on Bitcoin and names its “long-term bullish potential”

JPMorgan’s note essentially highlighted three main reasons to support Bitcoin’s long-term growth potential.

First, Bitcoin price has to rise ten times to match private sector investment in gold. Secondly, Cryptocurrencies are very useful. ANDn third place, BTC could lure long-term millennials into the investment world.

Behind Integration of cryptocurrency purchases through PayPal and the rapid rise in institutional demand, Bitcoin is increasingly seen as a safe haven.

There is a huge difference in the valuation of gold and bitcoin. Although the former has long been recognized as a safe haven, BTC has many different advantages. JPMorgan analysts said:

“Mechanically, Bitcoin’s market capitalization would have to increase tenfold from here to match the total private sector investment in gold via ETFs or bars and coins.”

One of the advantages of Bitcoin over gold is its usefulness. Bitcoin is essentially a blockchain network. This means that users can send Bitcoin to each other in a public ledger efficiently, conveniently, and easily. To try to do the same with gold there has to be physical delivery that becomes challenging.

As seen in many cold wallet transfers, It is easier to invest $ 1 billion in capital in the Bitcoin blockchain than to try the same with physical gold. The bank’s analysts added:

“Crypto currencies receive value not only because they serve as a store of wealth, but also because they are useful as a means of payment. The more economic players accept crypto currencies as means of payment in the future, the greater their usefulness and value.”

Bitcoin Price Monthly Chart. Source: TradingView.com

How long would it take for Bitcoin to fill the gap with gold?

Bitcoin is still in its infancy in terms of infrastructure, development, and mass adoption. As Cointelegraph reported, According to a study, only 7% of Americans have bought Bitcoin.

A well-regulated foreign exchange market is still lacking in some major markets such as Canada. Big banks still need to hold crypto assets, and that gives Bitcoin plenty of room to grow over the next five to ten years.