A report from JPMorgan’s Global Market Strategy division analyses three reasons for Bitcoin’s long-term potential.
JPMorgan, the $316 billion investment banking giant, said Bitcoin’s (BTC) long-term upside potential is „considerable. This new upbeat stance towards the market-leading cryptomone comes after PayPal announced that it will allow its users to buy and sell cryptoactives within its platform.
The main factor planted by JPMorgan’s Global Market Strategy division is Bitcoin’s competition with gold. The note, obtained by Business Insider, says:
„The long-term upside potential of bitcoin is considerable if it competes more intensively with gold as an ‚alternative‘ currency, we believe, as the Millenials would eventually become a more important component of the investor’s universe.
Analysts also pointed out the large valuation gap that exists between Bitcoin Future and gold. At least $2.6 trillion is believed to be stored in gold bars and ETFs. In contrast, BTC’s market capitalisation remains at USD 240 billion.
JPMorgan suggests three main reasons for a new bullish run at BTC
JPMorgan’s note essentially emphasised three main reasons for supporting Bitcoin’s long-term growth potential.
First, Bitcoin’s price has to increase 10 times to match private sector investment in gold. Second, crypt coins are very useful. Thirdly, BTC could attract the long-term millennials into the investment world.
Following the integration of PayPal’s purchases of cryptomonies and the rapid increase in institutional demand, Bitcoin is increasingly seen as a safe haven asset.
There is a huge difference in the valuation of gold and Bitcoin. Although the former has long been recognised as a safe haven asset, BTC has many different advantages. JPMorgan analysts said:
„Mechanically, bitcoin market capitalisation would have to increase 10 times from here to match total private sector investment in gold through ETFs or bars and coins“.
One of the advantages that bitcoin has over gold is its usefulness. Bitcoin is a blockchain network at its core. That means users can send Bitcoin to each other in a public ledger, efficiently, practically and simply. To try to do the same with gold, there needs to be a physical delivery, which becomes a challenge.
As seen in many cold wallet transfers, it’s easier to move $1 billion of capital in the Bitcoin block chain than to try to do the same with physical gold. The bank’s analysts added:
„Crypt coins gain value not only because they serve as a store of wealth but also because of their usefulness as a means of payment. The more economic agents accept crypt coins as a means of payment in the future, the greater their utility and value“.