Bitcoin is likely to outshine gold as Millennials become a more important component of the investment market over time and given their preference for “digital gold” over traditional bullion, JPMorgan said.
With a market capitalisation of $US575 billion, the bitcoin price would need a nearly fivefold jump to $US146,000 to match the value of private gold wealth held in gold bars, coins or exchange-traded funds, the bank’s note added.
JPMorgan strategists said the upside is conditional on the volatility of bitcoin converging with that of gold in the longer term.
Though JPMorgan sees the possibility of “current speculative mania” propelling bitcoin to between $US50,000 and $US100,000, it warned that such levels would prove unsustainable until its volatility levels out.
“We note that the spectacular bitcoin rally of the past few weeks has moved bitcoin into more challenging territory, not only in terms of its positioning backdrop, but also in terms of its valuation,” the bank said.