Money talks and it talks the loudest on Wall Street. The same applies this year to cryptocurrencies and bitcoin tokens in particular. It has risen in price value by around 500 percent since the start of 2021 and that kind of performance will impress anyone. Now, the same is visible even among the otherwise somewhat hesitant Wall Street top traders and executives. Previously the same group of individuals has followed the action on the crypto market and some have even expressed their interests or even personally held smaller amounts of cryptocurrency tokens. However, the general wisdom was to steer clear of crypto as an unknowable and potentially highly dangerous investment target.
That mentality stood its ground during the first massive bull run of 2017. Even when CME listed bitcoin futures and triggered a further climb in price value, Wall Street did not jump on the crypto train. However, now it seems that the record price that is three times the value of the 2017 record is making even the top minds of Wall Street take a pause and reconsider the situation. That is especially true for the broader crypto market and its shiniest companion – decentralized finance applications or DeFi. Because of that, even JPMorgan is now in the same mix with predictions that are bound to turn some heads not just on Wall Street, but in the entire global financial arena.
Market Worth Two Trillion USD
A lot of the media attention related to the cryptocurrency movements boils down to bitcoin and to a lesser extent ethereum. Besides the top two networks, other digital currencies can also end up in the media, including things like ripple or bitcoin cash. However, the entire cryptocurrency space is much larger than any individual digital currency network. The same space recently hit a value of two trillion USD. That is a staggering sum of money and it keeps growing. Also, the individual charts of market capitalization are also very interesting as all of them are basically showing an influx of money on an unprecedented scale.
Because of that, JPMorgan, previously well-known for its crypto sceptical approach, now decided to showcase a different outlook on the same domain. A report compiled by the same Wall Street banking juggernaut shows that the price of a BTC token could climb all the way up to 130,000 USD. That stands a chance of happening in the long-term because of several reasons. All of them, according to JPMorgan, stand a chance of creating a cumulative effect that would sweep the crypto markets to unprecedented heights.
An essential element in the analysis of JPMorgan is the connection of bitcoin prices to those of gold. Today, like in the past, the amount of investment present in the gold market is staggering. However, history shows clearly that is not the ultimate solution when it comes to fears of inflation and the loss of fiat currency value. Instead, it is only a part of the insurance hedge fund jigsaw that can include other elements. One of those is more and more bitcoin and its BTC token. Assessing bitcoin as an alternative currency like gold and doing that, in the long run, would mean that the same digital currency becomes firmly established in the investor mindset.
Also, a trend of alignment with the price of gold and its trend is more prevalent when it comes to the bitcoin network. JPMorgan found that during half a year, the measure of the volatility of the bitcoin price stabilized around the mark of 73 percent. That suggests a form of tentative normalization of bitcoin volatility. That pattern will reinvigorate investor interest, especially coming from those circles that are either tightly connected to business institutions or actually directly represent companies.
The main problem that companies willing to invest in cryptocurrencies face, according to JPMorgan’s analysis, is the issue of incredibly high volatility that the bitcoin network regularly faces. In the previous domains of main interest, which were things like esports, social media ventures, and similar technologically advanced or digital-only undertakings, that volatility came with the territory. That was why so many simply accepted it as a part of the crypto package, for better or worse. Yet, for institutional investors, that state of play is often a bridge too far.
The reasons for this are completely understandable. A company that made its fortune in some kind of a regular business field would be very hesitant to invest in a field where value can drop by something like 20 percent in one day. That is not a hypothetical scenario but something that regularly happened in crypto, at least so far. But, this headwind of institutional investment has been going down somewhat recently. As that happens, the companies are going to again start exploring their chance of putting some money into the crypto domain.
130,000 USD Benchmark
Throughout the analysis, the JPMorgan assessment mentions the sum of 130,000 USD several times. The bank believes that the mechanical support for that price range is more than possible. It would reflect the total investment in gold that the private sector is currently keeping. The present lull in the crypto market activity is also slowly building a foundation for that potential further jump. Bitcoin reached its latest record value at 61,700 USD several weeks ago. Now, April is holding onto a buoyant market for crypto tokens. Yes, the ETH token managed to hit its new record value at over 2,100 USD, but the BTC token appears more or less dormant.
But, the basis for the new record values is still very much present. The number of cryptocurrency wallets continues to grow and that covers ordinary users, companies, and everyone in between. Besides, the fundamentals of the next jump are also in place – soon, PayPal will roll out its crypto merchant function. That will allow over 29 million business PayPal users to provide their clients with crypto payment capacity. Now, will all of this eventually lead to a 130,000 USD price for a single BTC token? No one can tell, but as JPMorgan’s analysis points out, a scenario like that is not nearly as outlandish as it might have been in 2020 or 2019.