JPMorgan renews prediction that bitcoin could hit $146,000 – and says it’s acting more like digital gold than ever

Bitcoin seen on display
Bitcoin traded at around $63,160 on Wednesday.

  • JPMorgan has renewed its $146,000 long-term price target for bitcoin, which first made waves in January.
  • The bank says bitcoin is increasingly looking like a digital alternative to gold in the eyes of investors.
  • It said cryptos are “are an emerging asset class and thus on a multi-year structural uptrend.”

JPMorgan recently published a deep dive into digital assets and it makes for happy reading for crypto fans – albeit with a few caveats.

The US’s biggest bank has renewed its prediction that bitcoin could surge to $146,000 in the long term, if volatility subsides and institutions start preferring it to gold in their portfolios. That’s roughly 130% above Wednesday’s price of $63,160.

And JPMorgan thinks bitcoin, which is also a scarce product, is increasingly competing with gold for investors’ attention as a hedge against inflation. (That is, something that will rise even as inflation eats away at the value of other assets.)

“The re-emergence of inflation concerns among investors during September/October 2021 appears to have renewed interest in the usage of bitcoin as an inflation hedge,” JPMorgan strategist Nikolaos Panigirtzoglou said.

“Bitcoin’s allure as an inflation hedge has perhaps been strengthened by the failure of gold to respond in recent weeks to heightened concerns over inflation,” he said. Inflation is running at a 13-year high in the US and has surged around the world.

Panigirtzoglou said there is “little doubt” the token’s competition with gold will continue, as millennials become more powerful in the investing universe, given their preference for cryptocurrencies.

“Considering how big the financial investment into gold is, any such crowding out of gold as an ‘alternative’ currency implies big upside for bitcoin over the long term,” he said, suggesting a long-term price target of $146,000.

However, JPMorgan said that for the $146,000 price to come true, bitcoin’s huge volatility would have to fall sharply, so that rules-bound investors feel comfortable adding it to their portfolios.

Bitcoin’s volatility is currently around four to five times higher than gold, the bank said. That would have to fall dramatically before institutional investors plow in.

Read more: Crypto seems like nonsense. But lots of people keep getting rich from it. So am I the dumb one?

In a major caveat to its “theoretical” price target, JPMorgan said bitcoin’s volatility is a big block to sustainable price rises. Its reputation among institutional investors took a blow during April and May’s boom and bust, the bank said.

Indeed, JPMorgan reckons that volatility is such a problem that bitcoin’s fair price is actually around $35,000 at the moment. Yet the bank said that the token’s volatility is currently falling and that a price of $73,000 looks reasonable for next year.

However, bitcoin is wildly unpredictable. A surge above $146,000 looks entirely possible, given bitcoin’s gain of more than 340% in the last year. But another plunge to below $30,000, as seen in the summer, is also a possibility, the bank said.

Either way, JPMorgan’s global markets strategists appear bullish about crypto. “There is little doubt that cryptocurrencies and digital assets more broadly are an emerging asset class and thus on a multi-year structural uptrend,” they said.

“Digital assets have emerged as a clear winner post the pandemic, with retail investors joining institutional investors such as family offices, hedge funds and real money asset managers including insurance companies in propagating the asset class.”

Read the original article on Business Insider

Anthony Scaramucci says Elon Musk scared people off bitcoin but he backs it to soar like Amazon stock in the long run

Anthony Scaramucci founded SkyBridge Capital.

  • Anthony Scaramucci said Elon Musk had “scared people” off bitcoin, but backed it to soar in the long run.
  • He said bitcoin was like Amazon stock, which swung dramatically in its early history.
  • Scaramucci’s SkyBridge capital has around $500 million in bitcoin and sees it as digital gold.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Anthony Scaramucci has said that bitcoin will shoot higher in the long run despite some early setbacks – just like Amazon stock.

One of those setbacks has been the fact that Elon Musk “scared people” away from the cryptocurrency, the founder of SkyBridge Capital and former White House chief of communications told CNBC on Tuesday.

Musk’s electric car company Tesla stopped accepting bitcoin as payment in May due to its “insane” energy use, helping trigger a crash in the cryptocurrency. Bitcoin traded at around $33,000 on Wednesday, more than 45% below its record high of close to $65,000 reached in April.

Scaramucci, whose SkyBridge investment firm has around $500 million in bitcoin, said he thinks the huge volatility is more to do with the fact that the cryptocurrency is in the early stages of adoption than with Musk.

He compared bitcoin to Amazon, whose stock price has fluctuated dramatically through the years.

“If you went back to Amazon’s IPO back in 1997, if you held $10,000 of that stock on its IPO, it’s now worth $24 million. But you would have subjected yourself to eight periods of time where the stock dropped at least 50%.”

However, critics argue that bitcoin is not comparable to stocks as it has no intrinsic value.

Scaramucci said he was confident bitcoin would similarly shoot higher because millions more people would adopt it as a replacement for gold in investment portfolios.

Bitcoin fans argue the crypto asset’s scarcity means it can be a store of value that will protect investors against inflation, as gold traditionally has.

“Right now, we have about 125 million [bitcoin] users globally,” Scaramucci said. “Our research department of SkyBridge thinks that you will have at least a billion users by 2025.”

Read the original article on Business Insider

Bitcoin bull Mike Novogratz says the cryptocurrency will not be used as a payment system, but investors should buy it for protection against ‘insane’ global deficits

bitcoin atm
  • Mike Novogratz said bitcoin will not be used as a form of payment because the network can’t support thousands of transactions.
  • The long-time bitcoin bull said the cryptocurrency is a store of value asset akin to a digital gold.
  • He added that with “insane” global deficits, investors would be crazy to get out of bitcoin.
  • Sign up here our daily newsletter, 10 Things Before the Opening Bell.

Billionaire bitcoin bull Mike Novogratz said that the cryptocurrency will not be used as a form of payment because the network isn’t set up for it.

In an episode of the Exchanges at Goldman Sachs podcast, the Galaxy Digital Holdings CEO played up bitcoin’s use case as a store of value and asset class, and not a new form of payment.

“Bitcoin’s not going to be payments. The system really isn’t set up for payments. It’s not fast enough for thousands and thousands of transactions,” he said.

Bitcoin’s anonymous founder, Satoshi Nakamoto, presented bitcoin as a peer-to-peer cashless digital currency in the 2008 white paper. But now, crypto investors like Novogratz see other digital currencies taking on the payment role, and say bitcoin will be more akin to a digital gold.

Novogratz said the investment case for bitcoin lies in the fact that it’s the most distributed asset in the history of the world outside the dollar, and it’s a uniform store of value.

“What’s unique about stores of value is they’re social constructs,” he added. “It has value because we say it has. There has never been a more successful brand created in 12 years by a community. It was like they floated the baby in the river, and the community raised the baby and it’s now worth around $1 trillion.”

The current macroeconomic backdrop is “tailor made” for owning bitcoin, said Novogratz. With more Americans supporting forms of universal basic income and fiscal spending measures like free college tuition, the US government is likely to keep spending money, while other deficits around the world are likely to grow as well.

“The treasury department and the government is financing everything we want to spend, and that’s happening in countries all over the world. So we had bad deficits before COVID. Now we have deficits that are insane. So as long as that macro backdrop, that political backdrop is giving us a tailwind and the market is being adopted, you’re crazy to get out,” Novogratz said.

Read the original article on Business Insider

Bitcoin is more like risky digital copper than gold as an inflation hedge, Goldman Sachs’ top commodities analyst says

A pile of bitcoin cryptocurrencies is seen.
  • Bitcoin is closer to “digital copper” than “digital gold”, according to Goldman’s top commodities analyst.
  • That’s because bitcoin and copper act as “risk-on” inflationary hedges, while gold is “risk-off,” he said.
  • Commodities remain the best inflation hedge because they rely on demand, the bank’s research team said.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Investors should view digital currencies as a substitute to copper, rather than gold, Jeff Currie, global head of commodities research at Goldman Sachs, told CNBC on Tuesday.

“You look at the correlation between bitcoin and copper, or a measure of risk appetite and bitcoin, and we’ve got 10 years of trading history on bitcoin – it is definitely a risk-on asset,” Currie told CNBC’s “Squawk Box Europe.”

He said both bitcoin and copper work as “risk-on” inflationary hedges, or situations where investors have higher risk appetite. Gold is a more “risk-off” asset, where investors seek shelter when stocks are selling off.

Copper prices topped $10,000 a ton for the first time in a decade last month, as economic reopening triggered a rally in the metal. Demand has been surging as it’s seen as a critical component to the transition to a green-energy economy. Although prices suffered a sharp decline towards the end of May, they again rebounded.

Currie’s comments came after a wild few weeks for cryptocurrencies. Bitcoin was last trading 2% higher around $37,190 on Wednesday, and is up about 28% so far this year. The digital token lost more than 25% of its value over the last three months amid a broad crypto sell-off after Tesla suspended bitcoin payments and China announced digital tokens can’t be used for business.

Read More: Financial researcher Nik Bhatia explains why asset managers with a growth focus could be violating their fiduciary duty if they don’t consider bitcoin – and compares the crypto to Amazon’s stock 20 years ago

Currie, who is one of the most widely followed commodity experts, pointed out bitcoin and copper are more similar when it comes to acting as an inflationary hedging – a strategy that involves investing in assets that outperform the market when central bank policy causes prices to rise.

“There is good inflation and there is bad inflation. Good inflation is when demand pulls it, and that is what bitcoin hedges, that is what copper hedges, that is what oil hedges,” Currie told CNBC.

“Gold hedges bad inflation, where supply is being curtailed, which is focused on the shortages on chips, commodities and other types of input raw materials. And you would want to use gold as that hedge,” he said.

In a research note published Monday, Currie and his team said commodities remain the best inflation hedge because they rely on demand, not growth rates. “Commodities are spot assets that do not depend on forward growth rates but on the level of demand relative to the level of supply today,” the strategists wrote.

“As a result, they hedge short-term unanticipated inflation, created when the level of aggregate demand is exceeding supply in the late stages of the business cycle.”

Read the original article on Business Insider

Bitcoin is still driven by the ‘digital gold narrative’ among institutional clients who see it as a hedge against inflation, Fidelity’s digital assets president says

bitcoin vs gold 3

  • Institutional investment in bitcoin is still driven by the “digital gold” narrative, according to Tom Jessop.
  • Jessop, Fidelity’s digital assets president, said his clients are worried about monetary inflation and see bitcoin as a hedge.
  • Bitcoin is also viewed as a “long-dated call option on the use of the asset or the technology as a means of payment.”
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Bitcoin is still driven by the “digital gold narrative” among institutional investors who see the digital asset as a way to hedge against inflation, according to Tom Jessop, Fidelity’s digital assets president.

In an interview with CNBC on Tuesday, Jessop was asked which narrative surrounding bitcoin is the most popular with institutional investors.

The digital assets president said: “I would say the predominant narrative at this point is still the digital gold narrative which really started driving the market higher about a year ago after the pandemic.”

He added: “There are a number of clients that are concerned about the fiscal and monetary stimulus, monetary inflation, and they see a scarce digital asset like bitcoin, specifically, being an important part of that thesis.”

Bitcoin’s scarcity and potential to hedge against inflation are key reasons institutions are taking an interest in the asset, according to Fidelity’s digital assets president, but they aren’t the only ones.

In his interview, Jessop explained how a growing number of institutional investors are looking at bitcoin “from an asset allocation standpoint” due to its lack of correlation with other assets over longer periods of time.

Jessop also said that bitcoin is seen as a “network effect opportunity” by some institutional clients. He explained that a portion of his clientele views the digital asset as a “long-dated call option on the use of the asset or the technology as a means of payment.”

Fidelity’s digital assets president went on to say that he believes bitcoin’s recent boom and bust cycles “are part of the maturation of bitcoin as an asset class.”

Jessop also echoed comments from other crypto analysts who have called bitcoin’s recent fall a result of massive leverage unwinding.

“In some cases, we touched close to $30 billion of leverage driving prices higher, and in many cases, these investors can trade on 50 to 100 times leverageā€¦in the subsequent weeks that leverage has come down significantly, in some cases by two thirds,” Jessop said.

The digital assets president added that this de-leveraging process can be viewed as a “cleansing” for the ecosystem and that he expects with “basing” and “positive news flow,” bitcoin and other cryptocurrencies will begin to stabilize.

Read more: Financial researcher Nik Bhatia explains why asset managers with a growth focus could be violating their fiduciary duty if they don’t consider bitcoin – and compares the crypto to Amazon’s stock 20 years ago

Read the original article on Business Insider