According to JP Morgan, the price of Bitcoin could reach $146,000. As per an analysis published by the bank, in 2021 Bitcoin will see its value increase in a range between $50,000 and $100,000. However, this growth will not be stable. Indeed, JP Morgan states:
“While we cannot exclude the possibility that the current speculative mania will propagate further, pushing the bitcoin price up towards the consensus region of between $50k – $100k, we believe that such price levels would prove unsustainable”.
JP Morgan further adds that bitcoin adoption is likely to grow as younger generations prefer it to physical gold. But to meet the needs of private investors who now rely on gold ETFs, gold bars or currencies, its price would have to reach $146,000.
This is a hypothetical calculation because according to JP Morgan there is one condition that must first come true: Bitcoin must also align with gold in terms of volatility. This means that as long as the price continues to rise precipitously and fall with the jolts we’ve seen over the past month, its mass adoption will remain distant.
“It is thus unrealistic to expect that the allocations to bitcoin by institutional investors will match those of gold without a convergence in volatilities. A convergence in volatilities between bitcoin and gold is unlikely to happen quickly and is in our mind a multi-year process”.
JP Morgan: how will bitcoin change over the years
In short, for bitcoin to become the true alternative to gold and reach sky-high figures, it needs to reduce its volatility, and that will take years.
“This implies that the above-$146,000 theoretical Bitcoin price target should be considered as a long-term target, and thus an unsustainable price target for this year”.
Bitcoin is fresh from hitting its historical price peak at $34,000 on Sunday, January 3rd, then underwent a retracement that brought it to the current $31,500.
This price spike has contributed to increased demand from institutional investors, which is also evidenced by the fact that the Grayscale Bitcoin Trust has once again increased its funds in Bitcoin to $19 billion.
This combo, combined with the deflationary nature of Bitcoin and its limited supply, could lead to an increase in value, in line with JP Morgan’s prediction.