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Summary
- Bitcoin has caught the attention of JP Morgan, which values it at $146,000 in the long term.
- The ongoing rally in Bitcoin has been backed by its potential to replace gold and disrupt the payment landscape in the future.
- Billionaire hedge fund managers like Stanley Druckenmiller and Paul Tudor Jones, are also playing their hand in this rally.
Bitcoin’s Gigantic rally which picked up steam during the last quarter of 2020 and ultimately surpassed its historic $20,000 mark, is now catching Wall Street's attention. The investment banking giant, JP Morgan Chase & Co (NYSE: JPM) has recently made the headlines after predicting an eye-opening price of $146,000 for Bitcoin.
However, what’s more, interesting is JP Morgan is also going along the rising trend of Bitcoin having the ability and appropriate mechanism to replace the mighty gold in the long term.
Bitcoin VS Gold
JP Morgan acknowledged that Bitcoin has a massive opportunity in the future on the back of investments coming out of gold in the hunt for an “alternative currency”. The current market cap of the crypto bellwether is around $575 billion and if it has to cross the entire private sector investment in gold, then 4.6 times rise from the current level is on the cards.
However, the volatility of the Bitcoin is way too high to replace the stability of gold. To put it in perspective, the last 14-day average movement of Bitcoin has been more than $2,000, which is about 5.9% of the current price. In comparison, Gold has barely moved above 1% on an average in the last 14 days.
On 4 January, Bitcoin fell as much as 17% in a single day, which again affirms it being the epitome of volatility.
This extreme volatility of Bitcoin was also noted by the analysts at JP Morgan, which stated the volatility convergence of the two is unlikely to happen in the short term and may take many years. Also, the reduced volatility is essential for large funds to consider Bitcoin as an investment option.
Read More: Bitcoin Hits New Record High, Sails Past USD 30,000
Astute Investors’ stance
Some of the well-known investors are already in the game and playing quite big hands. For instance, the billionaire hedge fund manager Paul Tudor Jones had already disclosed in May 2020 that his fund is holding about 1%-2% of assets in Bitcoin. Another American hedge fund manager Stanley Druckenmiller is also holding Bitcoin owing to its characteristic of “store of value” just like gold.
The global payment solution provider, PayPal is also betting high on the holistic future of the Bitcoin in the payment landscape by allowing the acceptance of cryptocurrencies as a payment method.
Recently, New York-based Skybridge Capital has launched an entire fund focused on Bitcoin worth $310 million. The fund goes even beyond JP Morgan’s target and reportedly values BTC at a whopping $535,000, betting on its replacement of gold.
In a nutshell, the exorbitant rally in the Bitcoin has been backed by institutional investors and not just the retail hands. The rally may look emotionally driven, but this time the demand of Bitcoin is not solely based on the speculation but its potential to change the payment landscape and replace the mighty gold as a store of value.
