JPMorgan: Bitcoin has ‘Considerable' Long-Term Upside as it Competes with Gold ‘More Intensely'

The investment bank makes a bullish commentary for bitcoin as an “alternative currency” which not only serves as stores of wealth but also as a means of payment.

The tide is turning.

This week PayPal announced support for cryptocurrencies, and now JP Morgan is changing the tune, as it says, Bitcoin is competing with gold as an “alternative” currency.

The physical gold market, favored by the older generations, is worth $2.6 trillion, including the assets held within gold ETFs.

Bitcoin, on the other hand, has a market cap of $240 billion and mostly favored by millennial investors. In 2020, to date, Bitcoin has surged more than 80% compared to gold’s nearly 25%.

To catch up to hold in terms of market value, the leading digital currency would have to surge more than 10x from current levels. JPMorgan said in a note on Friday,

“Even a modest crowding out of gold as an ‘alternative' currency over the longer term would imply doubling or tripling of the bitcoin price.”

Over time, the investment bank said crypto could be held for other reasons than just being a store of wealth as gold is.

“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.”

It also mentioned PayPal that the endorsement from the payments company is “another big step toward corporate support for bitcoin.” This, according to them, would further enhance millennials’ usage of BTC as an alternative currency.

Greater interest by institutional investors

Overall, the potential long-term upside for bitcoin is considerable as it competes more “intensely” with gold, “given that millennials would become over time a more important component of investors' universe,” states JPMorgan.

Millennials and corporate endorsement of the digital currency have also induced greater interest by institutional investors, further says the report.

This is evidenced by the spike in activity across both bitcoin futures and options at CME. Before Paypal's announcement this week, open interest on CME bitcoin futures averaged a record of 10.5K contracts per day in Q3, up 32% from Q2 and up 127% vs. Q3 2019.

Moreover, institutional flow saw strong growth, with 692 new accounts added, and the number of large OI holders also averaged 79 in Q3, up 64% compared to Q3 2019.

“Holy Cow. Most bullish commentary for bitcoin that I have read from JP Morgan” noted Dan Tapiero, co-founder of 10T Holdings. “Widespread research piece reaches all clients of the bank. Paypal announcement “cover” for other traditional players to get involved,” he added.

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AnTy
AnTy
AnTy has been involved in the crypto space full-time for over two years now. Before her blockchain beginnings, she worked with the NGO, Doctor Without Borders as a fundraiser and since then exploring, reading, and creating for different industry segments.

[Alert] Use the author's self-conducted information at your own risk, do you own research, never invest more than you are willing to lose.

[Disclosure] The published news and content on BitcoinExchangeGuide should never be used or taken as financial investment advice. Understand trading cryptocurrencies is a very high-risk activity which can result in significant losses. Editorial Policy \\ Investment Disclaimer

1 COMMENT

  1. When BitCoin is back by physical gold, I'll buy in. Going from the current ‘backed by nothing' inflation riddled currency to another ‘backed by nothing' currency only puts us in the crosshairs of the communist globalists that want a one world digital currency. At first it was sold as ‘untrackable by government' and a ‘safe haven' , which it now has been proven to be neither.
    I had friends that were in on the ground floor. I was just getting ready to jump in when A. They got a threatening visit from the Secret Service and B. All of their BitCoin was stolen.
    Now, it's just a commodity to be wildly traded back and forth with fortunes made and fortunes lost.

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