Several strategists at JPMorgan are quite bullish on bitcoin even though their boss – JP Dimon – hasn’t always been kind towards the asset.
JPMorgan Document Suggests Gold-BTC Correlation
In the past, Dimon has said some rather disparaging things about the world’s leading crypto asset. However, this hasn’t stopped JPMorgan from cashing in on the digital currency and publishing regular reports about its price upheavals and volatility. In a recent document, the strategists made the claim that bitcoin will strengthen its ties to gold.
They also believe that the latter is going to surge beyond the $2K mark, and this will lead to BTC reaching $45,000. They stated:
With the gold price rising above $2,000, the value of gold held for investment purposes outside central banks is currently valued at around [$3 trillion]. In turn, this implies a $45,000 price for bitcoin under the assumption that bitcoin equalizes gold in private investors’ portfolios in risk capital or [volume]-adjusted terms.
They were also quick to discuss the upcoming halving, which is set to occur in April of next year. Halvings have constantly been good for bitcoin in that the asset becomes rarer following such an event. Block rewards are literally cut in half for miners who solve equations that ultimately add BTC units onto the blockchain and place them in circulation.
The JPMorgan strategists were quick to say that this upcoming halving will present similar circumstances for bitcoin, and that the asset could potentially jump much higher. They said:
This is because bitcoin’s production cost has historically acted as an effective lower bound. Indeed, the previous halving events of 2016 and 2020 were accompanied by a bullish trajectory for bitcoin prices that had accelerated post the halving event.
In contrast to bitcoin’s incoming success, the strategists mentioned that they foresaw Ethereum facing horrible selling pressure over the next few months thanks to April’s Shanghai upgrade. This, they think, will lead to short-term price losses for the world’s second largest digital currency. They said:
We thus expect Ethereum to somewhat underperform bitcoin over the near term.
A Lot of Things in Play
Matteo Greco – research analyst at crypto investment firm Fineqia International – believes there are several macroeconomic circumstances in play that could greatly affect the crypto arena in the coming months. He said:
The past few days have shown strong volatility as bitcoin dropped to the lowest trading price of about $25,800 on Wednesday [last week] due to investors’ fear concerning the U.S. reaching the debt ceiling. The increase of the debt ceiling means that the U.S. government is expected to issue between $800 billion and $1 trillion in the next six months. This means that, in the mid-term, money is removed from more risky assets to buy government bonds. The consequence could be an additional slowdown in volumes and liquidity.
