JP Morgan, the $ 316 billion dollar investment banking giant, said the potential long-term increase in Bitcoin (BTC) is “significant.” This new optimistic attitude towards the dominant cryptocurrency came after PayPal allowed users to buy and sell cryptocurrencies.
The main factor that JPMorgan’s global marketing strategy arm is talking about is Bitcoin’s competition with gold. The note that Business Insider received states:
“Bitcoin’s potential long-term rally will be significant if it competes intensely with gold as an ‘alternative’ currency, we believe, given that millennia will become a more important component of the investor world over time.”
Analysts have also identified a large gap in the valuation of bitcoin and gold. At least $ 2.6 trillion is said to be held in exchange traded funds (ETFs) and bullion. On the other hand, BTC’s market value remains at $ 240 billion.
JPMorgan suggests three main reasons for BTC Bull ma
The memo from JPMorgan highlights three main reasons to support Bitcoin’s long-term growth potential.
First, Bitcoin must grow 10 times to match private sector investment in gold. Second, cryptocurrencies are very profitable. Third, BTC could attract millennials in the long run.
With the integration of PayPal purchases of cryptocurrencies and the rapid growth of institutional demand, Bitcoin is increasingly seen as a haven.
There is a big difference in the valuation of gold and bitcoin. Although the former has long been considered a safe resource, BTC has several clear advantages. JP Morgan analysts say:
“Technically, the market value of Bitcoin must rise tenfold from here to match the total private sector investment in gold through ETFs or gold and coins.”
One of the advantages of Bitcoin over gold is its usefulness. Bitcoin is a core chain network. This means that users can send BTC to each other in the general ledger efficiently and conveniently. Transporting gold requires physical delivery, which complicates the task.
As you can see from many cold wallet transfers, it is easier to transfer $ 1 billion of capital to the Bitcoin blockchain than it is to transfer physical gold. Bank analysts explained:
“Cryptocurrencies gain value not only because they function as a fortune, but also because of their usefulness as a means of payment. The more financial agents accept cryptocurrencies as a payment method in the future, the greater the utility and value. ”
Monthly price chart for Bitcoin. Source: TradingView.com
How long will it take for Bitcoin to close the gap with gold?
Bitcoin is still in its infancy when it comes to infrastructure, development and mass adoption. As reported by the Cointelegraph, according to the study, only 7% of Americans have previously bought bitcoin.
Some large markets, such as Canada, still lack a well-regulated foreign exchange market. The big banks still do not provide custody of cryptocurrencies, and this gives Bitcoin a lot of room to grow over the next five to ten years.