JPMorgan, the $ 316 billion investment banking giant, said the potential long-term uptrend for Bitcoin (BTC) was “substantial.” This new bullish stance on the dominant cryptocurrency comes after PayPal allowed its users to buy and sell crypto assets.
JP Morgan from “Bitcoin is a scam and will blow up in 2017” to “Bitcoin’s competition with gold” in 2020.
We have come a long way. pic.twitter.com/xceabkHaVJ
– Krüger (@krugermacro) October 24, 2020
The main factor that JPMorgan’s Global Markets Strategy division brings forward is Bitcoin’s competition with gold. The note received from Business Insider reads:
“The potential long-term uptrend for Bitcoin is significant if it competes more intensely with gold as an ‘alternative’ currency, as millennials would become a more important part of the investing universe over time.”
The analysts also pointed to the large valuation gap between Bitcoin and gold. At least $ 2.6 trillion is said to be stored in gold exchange traded funds (ETFs) and bars. In contrast, BTC’s market cap remains at $ 240 billion.
JPMorgan cites three main reasons for a BTC bull Ma
JPMorgan’s note basically highlighted three main reasons to support Bitcoin’s long-term growth potential.
First, Bitcoin needs to rise ten times to match the private sector’s gold investment. Second, cryptocurrencies are very useful. Third, BTC could appeal to millennials in the longer term.
With PayPal integrating crypto purchases and the rapid rise in institutional demand, Bitcoin is increasingly viewed as a safe haven.
There is a massive difference in the valuation of gold and bitcoin. While the former has long been recognized as a safe haven, BTC has many distinct advantages. JPMorgan analysts said:
“Technically, Bitcoin’s market capitalization would have to increase ten times 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 efficiently and conveniently send BTC to each other in a public ledger. To transfer gold, physical delivery must be made, which becomes a challenge.
As seen with many cold wallet transfers, it is easier to move $ 1 billion worth of capital to the Bitcoin blockchain than with physical gold. The bank’s analysts further stated:
“Cryptocurrencies are not only gaining in value because they serve as a store of wealth, but also because of their use as a means of payment. The more economic players accept crypto currencies as a means of payment in the future, the greater their usefulness and value.”
How long would it be for BTC to close the gap with gold?
Bitcoin is still in its early stages in terms of infrastructure, development, and mainstream adoption. As Cointelegraph reported, only 7% of Americans have bought Bitcoin so far, according to a study.
There is still a lack of a well-regulated stock exchange market in some major markets like Canada. Big banks still have crypto assets to hold, and that gives Bitcoin a lot of headroom for growth over the next five to ten years.