A number of strategists from JPMorgan Chase & Co hold Bitcoin is expected to compete more fiercely with gold as an "alternative currency" in the following years for the increasing Millennial investors' interest. Therefore, the analysts think the OG crypto could over time morph into much more than merely a store of value, and BTC's "considerable" long-term upside potential strengthens this thesis.
JPMorgan's bullish attitude follows PayPal announced to begin supporting Bitcoin and a few alternative cryptocurrencies.JPMorgan Identified Three Key Catalysts For Bitcoin's Potential Upside
As per Business Insider, JPMorgan's Global Markets Strategy team released a note to the clients of the bank on Friday. It is surprised that the multi-billion-dollar investment bank was very bullish on the flagship cryptocurrency.
In particular, the analysts stressed three major reasons they believe bitcoin has long-term upside potential, though it now looks "overbought for the near term".
First of all, they stated the cryptocurrency's role as a good competitor. In the following years, they see Bitcoin's competition against gold as an alternative currency becomes fiercer since the Millennial demographic adores cryptocurrencies. JPMorgan notes these young investors will finally become a "more important component of investors universe."
But, Bitcoin has a long way to go as it now boasts a market valuation of around $242 billion, as per CoinMarketCap. On the other hand, gold is a huge market, with nearly $3 trillion in the private investment sector. In order to offset the considerable valuation gap with precious metal, the cryptocurrency will be asked to leap 10 times. However, even a modest crowding out of gold by investors in the long-term would result in the price of Bitcoin doubling or tripling, the analysts wrote.
Secondly, Bitcoin has set up utility which has been especially obvious in countries with authoritarian regimes. As a blockchain-based asset, it has better advantages than gold, and it is much harder and more expensive for users to transport gold than Bitcoin, regardless of locale. In addition, no central authority can prohibit customers from using Bitcoin, differentiating from gold that can be easily confiscated.
Eventually, Bitcoin is increasingly acceptable for corporate and this will probably push more Millennial investors towards the asset in the long run. The JPMorgan strategists regarded PayPal's recent integration of crypto assets as "another big step toward corporate support for bitcoin."Bitcoin Could Rise Beyond Being Just A Store Of Value
Although Bitcoin is incredibly volatile, supporters have long appealed for the asset being an excellent store of value such as the world's traditional safe-haven asset, gold.
Still, JPMorgan rightly holds cryptocurrency will finally transcend the store of value role. As they explained, crypto does not merely derive value from being a store of value but also as a means of payment. The note goes, "The more economic agents accept cryptocurrency as a means of payment in the future, the higher their utility and value."
JPMorgan's Cryptocurrency U-Turn
Most interestingly, JPMorgan is now singing Bitcoin praises with flippantly dismissing it for years, as per its note. Actually, the CEO of the bank, Jamie Dimon infamously called Bitcoin "a fraud" earlier in 2017.
Currently, it seems that the bank has reluctantly accepted the Bitcoin is the future and is gradually abandoning its anti-bitcoin stance. Apart from praising the budding asset class, JPMorgan has also set up a banking relationship with cryptocurrency exchanges Coinbase and Gemini.