Bitcoin - the first-ever digital currency - was launched in 2009 to fill in the loopholes of the financial system. Fast-forward to 2021, and Bitcoin is exploding - in both value and popularity. Despite the global pandemic and prevailing market uncertainty, Bitcoin has shown strong traction and resilient appreciation in price so far this year.
Large, global financial players such as PayPal and Visa are slowly making their way into the cryptocurrency space. Bitcoin has also found support with one of the largest investment banks in the world - JPMorgan. A recent price prediction from the financial powerhouse has raised the hopes of traders with respect to the target price of Bitcoin in the current bull market.
Here we discuss JPMorgan’s Bitcoin price prediction and its implications.
JP Morgan Prediction About Bitcoin
JPMorgan, one of the largest US investment banks, recently touted Bitcoin as an alternative currency to gold that can double or triple its price in the long run.
Bitcoin recently surpassed the psychological mark of $50,000 per unit. One week ago, it hit a new all-time high of $63,000. JPMorgan’s prediction is making rounds in news and media outlets because its analysts believe Bitcoin can eventually rise to $146,000 within a few years.
Bitcoin’s current market capitalization is more than $1 trillion. According to JPMorgan, Bitcoin has to rise about three-fold to equal the $2.7 trillion figure invested in gold globally.
This prediction is remarkable since it comes from a financial institution that was critical of Bitcoin at one point in time. This change is driven by the actions of financial service companies such as PayPal and Square that have started to accept cryptocurrency payments on their networks.
Several financial institutions are also embracing change in the burgeoning cryptocurrency space because a considerable number of younger investors and individuals prefer Bitcoin over traditional financial systems. Older generations tend to be somewhat skeptical about it, but millennials typically prefer to invest in Bitcoin over gold. According to one survey, millennials have a higher equity holding in Grayscale, a company that holds Bitcoin in its trust, than Netflix.
JPMorgan’s report goes on to state that significant price rises will not occur in 2021. They believe the price increment to be a multi-year process since Bitcoin is somewhat overbought today and vulnerable to profit-taking action. JPMorgan’s prediction makes sense over the long term since Bitcoin is a better payment system than gold.
Speculating on the prospects of Bitcoin, JPMorgan has also invested in the cryptocurrency market. It created the JPM coin, its own digital currency, and is developing a new Blockchain unit.
What Does the Bitcoin Bull Run Imply for Traders?
The digital currency that was once mysterious for even the largest investors is now on a bull run. Since May 2020, Bitcoin has increased in value by more than 300%.
The bullish forecast by JPMorgan is fueling more confidence and optimism in the minds of traders and investors. However, there is also another school of thought that contends that the current bull run will repeat history and end in a massive price crash, as happened in 2017.
This is a possibility since Bitcoin has followed similar price patterns in the past. However, the situations prevailing then were markedly different from those of today. The cryptocurrency space and the economy are in a different shape now. Consider the following:
- As stated above, millennials are entering the crypto arena with big yet realistic expectations. They are well aware of the shortcomings of the current financial system. Therefore, they are choosing modern investment options such as Bitcoin over traditional investment options.
- Back in 2017, institutional investors were dubious about the potential of the cryptocurrency market. Hence, they were skeptical about holding Bitcoin for long periods. Today, large companies are coming on board. Institutions are allowing larger investors to purchase and hold crypto.
The rise of prices in Bitcoin is not a bubble that will burst any time soon. According to the bull experts, we are not even halfway through the crypto bull cycle. They are predicting the length of this cycle using their current and past metrics. However, two major events spiked the growth of the Bitcoin market:
The global pandemic caused sharp economic declines all around the world. Under such circumstances, people put their trust in Bitcoin as a hedge against the economic crisis. Institutions such as Microstrategy, Tesla, and Square Corp invested their cash reserves into Bitcoin to hedge against the consequences of inflation.
Bitcoin halvings happen every four years when the rate of new BTC creation is cut in half. The third halving event was in May 2020, where mining rewards of 12.5 BTC were reduced to 6.25 BTC. The addition of new coins in circulation fell, triggering a rise in prices in the market.
2020 was an ideal time to invest in cryptocurrency. However, it is not too late even now. If you want to start trading in Bitcoin or other cryptocurrencies, Wisebitcoin can help you.
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