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JP Morgan: Bitcoin’s Reducing Volatility Makes It Extra Interesting to Establishments, Revises BTC Value Prediction to $130K

04/06/2021
JP Morgan: Bitcoin's Decreasing Volatility Makes It More Appealing to Institutions, Revises BTC Price Prediction to $130K

JP Morgan says that bitcoin’s volatility has decreased in latest weeks, making the cryptocurrency extra interesting to institutional traders. The funding financial institution has additionally revised its bitcoin worth goal to $130,000.

Elevated Institutional Adoption, New Value Prediction for Bitcoin

JPMorgan mentioned final week that bitcoin’s worth volatility has been declining in latest weeks, noting that this has made the cryptocurrency extra interesting to institutional traders in search of low-correlation belongings to diversify their funding portfolios.

Bitcoin’s excessive volatility has been one of many largest limitations to BTC adoption by establishments, JPMorgan defined, including that it now sees indicators that the cryptocurrency’s volatility is normalizing.

“The latest change within the correlation construction of bitcoin relative to conventional asset lessons” will doubtless enhance the institutional adoption of bitcoin, JPMorgan elaborated. Based mostly on the present gold worth of $1,700 per troy ounce, the financial institution says, “Mechanically, the bitcoin worth must rise [to] $130,000, to match the whole personal sector funding in gold.” If bitcoin’s volatility continues to converge with gold’s volatility, the financial institution says its long-term worth goal can be $130K, including:

Contemplating how huge the monetary funding into gold is, any such crowding out of gold as an ‘various’ foreign money implies huge upside for bitcoin over the long run.

The funding financial institution beforehand predicted that the worth of bitcoin would attain $146,000 in the long run, however lowered its estimate as the worth of gold fell just lately from a peak of $1,900 per troy ounce. “The decline within the gold worth since then has mechanically lowered the estimated upside potential for bitcoin as a digital various to conventional gold, assuming an equalization with the portfolio weight of gold,” the financial institution defined.

JPMorgan’s bitcoin worth goal relies on the agency’s expectation that bitcoin’s volatility will converge with gold’s. Nonetheless, this convergence won’t occur within the close to future, because the three-month realized volatility for bitcoin just lately stood at 86%, versus simply 16% for gold. The funding financial institution famous:

A convergence in volatilities between bitcoin and gold is unlikely to occur rapidly and is probably going a multi-year course of. This suggests that the above $130,000 theoretical bitcoin worth goal must be thought-about as a long-term goal.

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