JPMorgan, the biggest U.S. bank, has predicted that Bitcoin could theoretically meet a long-term pie-in-the-sky target of $146,000.
As the strategist Nikolaos Panigirtzoglou points out, such immense profits might be achieved if Bitcoin manages to crowd out gold, but he also warns that the phenomenon is not going to happen immediately, as some bulls may expect:
A convergence in volatilities between Bitcoin and gold is unlikely to happen quickly and is in our mind a multiyear process. This implies that the above-$146,000 theoretical Bitcoin price target should be considered as a long-term target, and thus an unsustainable price target for this year.
Image by jpmorgan.com
“Unsustainable” targets
While some expect that Bitcoin will trade in the $50,000-$100,000 range this year, JPMorgan’s strategists warn the permabules that such amounts will be “unsustainable” in 2021.
However, the bank does not rule that the biggest cryptocurrency will potentially meet those crazy goals this year due to speculative fervour.
Bitcoin climbed to a new all-time high of $34,800 on Jan. 3 before dropping below the $28,000 mark the next day in its biggest decline since “Black Thursday” in March 2020.
Bitcoin’s stock-to-flow value model—which has been accurate so far—projects that by the end of 2021, Bitcoin could reach $100,000.
JPMorgan’s backtracking
The goals of JPMorgan should be treated with a pinch of salt. At the end of November, when Bitcoin was still approaching all-time highs, Panigirtzoglou had to backtrack on his previous forecast that commodity trading advisors might thwart his rally:
Bitcoin’s continued rally is challenging our previous assessment that overbought positions by momentum traders such as CTAs could potentially trigger profit taking or mean reversion flows over the near term.
JPMorgan predicted that hedge funds and insurance firms could spend at least $600 billion in Bitcoin.
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