Bitcoin and cryptocurrencies have become one of the leading investment options in the current economy. They have exploded as most investors have opted to put their money in digital assets with various banks also beginning to offer crypto services. Bitcoin hype was ignited due to its massive performance this year, rising from lows of around $15,000 in October 2020 to the current price of around $56,000.
One of the leading financial institutions, JP Morgan has renewed its prediction on the leading cryptocurrency; Bitcoin’s value will hit $146,000 in the long run. However, it also warns that the token can still go on a bear run to hit $35,000.
According to the JP Morgan analysis, the long term rise of Bitcoin is dependent on it edging gold as the preferred hedge against inflation. At the moment, most crypto industry experts seem to be in a consensus that the token will hit $100,000 before the end of the year, thanks to increasing inflation rates.
So far, the US economy is facing its biggest inflation rate in 13 years. This is down to the measures put in place to mitigate the impact of the coronavirus on the economy. The Federal Reserve went into printing mode.
For the longest time, gold has served as a hedge against inflation. However, for now, it has failed to respond to heightened inflation concerns. Investors are therefore looking for alternative unconventional investment options to guard against inflation, which has seen most investors replace gold with Bitcoin.
So far, Bitcoin has been enjoying massive gains post-pandemic. It has been the preferred investment option by retail investors while institutional investors are also beginning to pick it up. Bitcoin will also enjoy more sustainable growth as millennials become more active in the investment markets.
JP Morgan’s researchers believe that sustained Bitcoin inflows can lead to it hitting $73,000 by the start of 2022. If they are sustained for longer, then Bitcoin will hit $146,000.
Bitcoin hitting $146k is unassured
Anyone who has interacted with digital currencies understands that nothing is given in the crypto world. The volatile prices of crypto mean the prices can either go high or low depending on various factors.
JP Morgan acknowledges the risk of crypto volatility for investors. The bank believes that the volatility has to fall sharply for investors to become more comfortable adding Bitcoin to their portfolios.
Gold for the longest time has stood out due to its stability. Bitcoin however currently has around five times more volatility than gold, which makes it have unsustainable prices. Institutional investors however prefer stability in their portfolio.
Given the previous Bitcoin movements within the year, it is open to both fall and rise. While Bitcoin rising to $146k remains a bigger possibility, in case of a price decline, the bank believes its value would hit $30,000.
Either way, digital currencies currently remain one of the best investment option for those afraid of inflation. It would take massive actions by the Federal reserve and central banks to manage the current inflation rate and get traditional investments and gold to outperform crypto.