Bitcoin closed the year with a record 300% increase over 2020. On Saturday, January 2, 2021, it hit its exact high of $ 33,099, which was stuck on Wall Street. According to CNBC, one of America’s largest investment banks, JP Morgan, this is just the beginning.
In a notice released on Jan. 4, 2020, financial holding JP Morgan estimates that the price of Bitcoin could hit $ 146,000 in the long term. She stresses that this advancement is due to the cryptocurrency’s competition for gold, which is positioned as an alternative currency. Before JP Morgan gets to it, however, it believes that it must gain stability which is not gained.
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Bitcoin capitalization is calculated based on the total number of Bitcoin in circulation, which is currently worth over $ 575 billion. According to the holding company, Bitcoin’s capitalization needs to be multiplied by 4.6 to reach the $ 2.7 trillion private investment in gold. This requires an increase in investor confidence and thus a stabilization of the price for digital currencies. “The reason for this is that for most institutional investors the variability of each price is what counts for the risk management of the portfolio. The higher it is, the higher the risk capital,” explains the note from the holding company. A function that is far from the essence of cryptocurrency. As evidence, it fell sharply on Monday, briefly falling below the $ 30,000 mark.
Within the Bitcoin community, some believe that the January 2nd increase can be explained by the fact that institutional investors are starting to take an interest in it. A position endorsed by JP Morgan who claims that “there is little doubt that it is institutional flows to Bitcoin that are differentiating 2020 from 2017.” Others see the same pattern as in 2017, when Bitcoin experienced strong growth before falling. The latter view Bitcoin as a speculative asset with no intrinsic value and therefore a bubble that is likely to burst.
In the past, Jamie Dimon, CEO of JP Morgan, called Bitcoin a “scam” and compared its development to 17th century tulipomania, a sudden craze for tulips that led to its collapse. Naturally. Even so, he’s more interested in blockchain and has created his own virtual currency, JPM Coin. What a nuance.