Analysts at JP Morgan say bitcoin’s emergence as the digital version of gold in the eyes of millennials means there could be a “doubling or tripling” in the price of the leading cryptocurrency if it continues on its current trajectory.
The bank’s forecast, delivered in a research note on Friday, may come as a surprise to bitcoiners who were following the market during the 2017 bull run. At the time, CEO Jamie Dimon belligerently described it as a “fraud” and said he would sack anyone in his employ “stupid” enough to trade it.
Fast-forward a few years and corporate players who were once highly skeptical of crypto are converting in growing numbers, led by business intelligence firm MicroStrategy, global payments firm PayPal, Twitter boss Jack Dorsey’s Square platform and others.
Observers attribute the growing shift into bitcoin and hard assets like gold to rampant money printing to address the economic impact of the Covid-19 pandemic, which many expect will lead to fiat currency devaluation.
Among younger people, the research note states, bitcoin is a more desirable hold than the cumbersome and confiscatable precious metal: “The older cohorts prefer gold, while the younger cohorts prefer bitcoin as an ‘alternative’ currency.”
The firm, which just launched JPM Coin, an in-house stablecoin, said this could pose a challenge to gold in the long term while driving bitcoin ever higher: “Even a modest crowding out of gold as an ‘alternative’ currency over the longer term would imply doubling or tripling of the bitcoin price from here.”
JP Morgan’s analysts are certainly not the only ones seeing this trend emerge.
Real Vision founder Raoul Pal believes bitcoin will “flip” gold.
The former Goldman Sachs executive tweeted on October 27: “Bitcoin is eating the world… It has become a supermassive black hole that is sucking in everything around it and destroying it. This narrative is only going to grow over the next 18 months. You see, gold is breaking down versus bitcoin…and gold investors will flip to BTC.”
He continued: “Bitcoin’s performance is SO dominant and SO all-encompassing that it is going to suck in every single asset narrative dry and spit it out. Never before in my career have I seen a trade so dominant that holding any other assets makes almost no sense.
“The macro, flows, technology, demography and societal strains have all converged to this moment in time and the definite answer from markets is – #bitcoin. I get this sounds a little evangelical but I’m struggling to see it any other way right now.”
Michael Saylor, CEO of MicroStrategy, whose recent decision to shift the firm’s $425-million corporate treasury into bitcoin has already yielded a gobsmacking $100-million profit, responded: “For the first time in history, we have a software network capable of storing & channeling monetary energy without power loss. #Bitcoin is the first digital monetary network. As investors & enterprises come to realize this, the consequences will be profound.”
Saylor, a rocket scientist and one-time bitcoin skeptic, recently said the crypto might be “1,000 times better than gold.”
However, prominent gold bug and bitcoin critic Peter Schiff remains unconvinced of the crypto’s potential.
One follower responded: “Why would anyone sell Apple in 2010 to buy Nokia and Kodak?”