JPMorgan Doubles Down On Its Massive Bitcoin Price Prediction—But Adds A Serious Warning
Bitcoin and cryptocurrencies have swept through Wall Street this year, with many of the biggest banks beginning to roll out crypto services.
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The bitcoin price has soared from around $15,000 per bitcoin this time last year to over $60,000 today—causing "supple shocks" that analysts think have grown stronger over the last month.
Now, banking giant JPMorgan has renewed its prediction that bitcoin could more than double to around $146,000 in the long term but has warned bitcoin's extreme volatility could send its price sharply lower, giving bitcoin a fair value of just $35,000.
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"This challenges the idea that a price target of $100,000 or above, which appears to be the current consensus for 2022, is a sustainable bitcoin target in the absence of a significant decline in bitcoin volatility," JPMorgan analysts led by Nikolaos Panigirtzoglou wrote in a note to clients seen by Business Insider. "Digital assets are on a multiyear structural ascent, but the current entry point looks unattractive."
Many bitcoin and crypto market watchers have predicted the bitcoin price will hit $100,000 before the end of 2021, in part due to inflation fears pushing investors into so-called safe haven assets.
Concerns that inflation—now at a 13-year high in the U.S.—could be more persistent than transitory has this week led to the Federal Reserve to begin scaling back its huge pandemic-induced quantitative easing program.
"Digital assets have emerged as a clear winner post the pandemic, with retail investors joining institutional investors such as family offices, hedge funds and real money asset managers including insurance companies in propagating the asset class," JPMorgan analysts wrote.
The bitcoin price has added more than 300% over the last 12 months, helping the combined cryptocurrency market add around $2 trillion to its total value.
"The re-emergence of inflation concerns among investors during September/October 2021 appears to have renewed interest in the usage of bitcoin as an inflation hedge," JPMorgan strategists wrote. "Bitcoin's allure as an inflation hedge has perhaps been strengthened by the failure of gold to respond in recent weeks to heightened concerns over inflation."
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The bank's researchers think that if bitcoin's volatility continues to fall, a price of $73,000 in 2022 is plausible, but its wild swings mean an increase of more than double its current $61,000 or even a drop to under $30,000 is also a possibility.
However, interest in bitcoin as an inflation hedge replacement for gold, even to a small degree, could mean result in a "big upside for bitcoin."
"Considering how big the financial investment into gold is, any such crowding out of gold as an 'alternative' currency implies big upside for bitcoin over the long term," Panigirtzoglou wrote, reiterating his earlier long-term bitcoin price prediction of $146,000 per bitcoin.Source