JP Morgan says that bitcoinâ€™s volatility has decreased in recent weeks, making the cryptocurrency more appealing to institutional investors. The investment bank has also revised its bitcoin price target to $130,000.
Increased Institutional Adoption, New Price Prediction for Bitcoin
JPMorgan said last week that bitcoinâ€™s price volatility has been declining in recent weeks, noting that this has made the cryptocurrency more appealing to institutional investors seeking low-correlation assets to diversify their investment portfolios.
Bitcoinâ€™s high volatility has been one of the biggest barriers to BTC adoption by institutions, JPMorgan explained, adding that it now sees signs that the cryptocurrencyâ€™s volatility is normalizing.
â€œThe recent change in the correlation structure of bitcoin relative to traditional asset classesâ€ will likely increase the institutional adoption of bitcoin, JPMorgan elaborated. Based on the current goldâ€™s price of $1,700 per troy ounce, the bank says, â€œMechanically, the bitcoin price would have to rise [to] $130,000, to match the total private sector investment in gold.â€ If bitcoinâ€™s volatility continues to converge with goldâ€™s volatility, the bank says its long-term price target would be $130K, adding:
The investment bank previously predicted that the price of bitcoin would reach $146,000 in the long term, but lowered its estimate as the price of gold fell recently from a peak of $1,900 per troy ounce. â€œThe decline in the gold price since then has mechanically reduced the estimated upside potential for bitcoin as a digital alternative to traditional gold, assuming an equalization with the portfolio weight of gold,â€ the bank explained.
JPMorganâ€™s bitcoin price target is based on the firmâ€™s expectation that bitcoinâ€™s volatility will converge with goldâ€™s. However, this convergence will not happen in the near future, as the three-month realized volatility for bitcoin recently stood at 86%, versus just 16% for gold. The investment bank noted:
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