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- Bitcoin’s appeal to the institutions has witnessed a significant rise due to its declining volatility over the past few weeks.
- Bitcoin’s growing reliability is deteriorating the foundation of the traditional gold market.
- For BTC to become “digital gold,” its price must rise to $130,000 to match the total private sector investment in gold.
The Business Insider’s Thursday issue reported America’s largest investment bank and financial services holding company, JPMorgan Chase & Co, updated its long-term price target for Bitcoin (BTC) to $130,000. However, its analysts do not expect the change to happen overnight, and they suggest probably years.
Declining Volatility, Increases Institutional Interests
The financial and business news website founded in 2007 discusses Bitcoin’s escalating appeal to the institutions owing to the declining volatility of the decentralized digital currency over the past few weeks. Earlier, one of the major roadblocks on the path to institutional adoption of the BTC was its constantly tubulating price. But as JPMorgan described, bitcoin’s normalizing volatility seems to have reinvigorated its institutional interest.
Bitcoin Stealing Gold’s Spotlight
Meanwhile, bitcoin’s growing reliability has negatively affected the traditional asset, the gold market. Evidently, since mid-October, gold witnessed a fund outflow of $20 billion, whereas for bitcoin, an inflow of $7 billion. And JPMorgan sees this considerable chunk out of gold as a significant long-term benefactor to BTC.
However, the NYC-based firm’s statement also revealed that the drop in gold prices, from tipping $1,900 to $1,700 per troy ounce today, is what pressed them to switch BTC’s previous long-term potential expectations from around $146,000 in January to now $130,000, i.e., 121% increase from current rates.
A Multi-Year Process
The bank explained, for BTC to fully acquire the “digital gold” spot, its price needs to rise to $130,000 to match the total private sector investment in gold, given its volatility continues to decrease and at some point converges to that of gold. At present, BTC’s three-month realized volatility equates to 86% and gold’s 16%. So, the convergence in volatilities between Bitcoin and gold can’t happen in a blink. Closing this gap seems like a “multi-year process.”
With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts around the clock, and is a strong advocate for women in STEM.
