A new report from JPMorgan’s Global Markets Strategy department has detailed three bullish reasons for Bitcoin’s long-term potential, meaning the investment giant has turned bullish on the crypto coin.
The $316 billion investment banking company said the potential upside for Bitcoin in the long term is ‘considerable’ – a new optimistic view towards the kind cryptocurrency that follows PayPal’s announcement on supporting crypto on its platform.
JP Morgan, from "Bitcoin is a fraud and will blow up" in 2017 to "Bitcoin’s competition with gold" in 2020.
We've come a long way. pic.twitter.com/xceabkHaVJ
— Alex Krüger (@krugermacro) October 24, 2020
The key factor pointed out by JPMorgan’s Global Markets Strategy division is Bitcoin’s context with gold.
The note reads: “The potential long-term upside for bitcoin is considerable if it competes more intensely with gold as an ‘alternative’ currency we believe, given that millennials would become over time a more important component of investors’ universe.”
The analysts also pointed out the massive valuation gap between Bitcoin and gold. At least $2.6 trillion is believed to be kept in gold exchange-traded (ETFs) and bars. On the other hand, the market cap of BTC is still around $240 billion.
Three Major Reasons for a BTC Bull Market
JPMorgan’s report basically highlighted three key reasons to support the potential long-term increase in the price of Bitcoin.
First, Bitcoin needs to go up ten times to match the private sector’s gold investment. Second, cryptocurrencies are highly utilizable, and third, BTC could attract millennials in the long-term.
JPMorgan analysts said: “Mechanically, the market cap of bitcoin would have to rise ten times from here to match the total private sector investment in gold via ETFs or bars and coins.”
One of the upsides Bitcoin has compared to gold is utility. Bitcoin is a blockchain network at its core, which means users can transfer BTC to one another on a public ledger, effectively and practically. To transfer gold, there has to be physical delivery, which is rather difficult.
The bank’s analysts explained: “Cryptocurrencies derive value not only because they serve as stores of wealth but also due to their utility as means of payment. The more economic agents accept cryptocurrencies as a means of payment in the future, the higher their utility and value.”