300% Upside for Bitcoin, say JPM Strategists

Disclaimer: This post does not constitute financial advice. Author has no position in Bitcoin. Do your own due diligence before making an investment.

It seems like an impossibly high number, but don’t forget, Bitcoin was trading at less than 10 cents in 2010. It’s still a growing market.

Strategists at JPM believe that Bitcoin is already competing with gold for flows. Many analysts believe bitcoin will eventually overcome gold as a store of value and hedge against inflation.

Bitcoin is currently cruising around $36,000 USD. This would represent an increase of approximately 300%, or a multiple of about 4.2.

Their prediction comes with a few caveats. First, Bitcoin must become less volatile. The constant spikes and crashes might be fine for younger retail investors, but old money wants stability. Which is why gold has always been so great. Precious metals have only crashed a few times in history. And usually this over the course of months or years.

Like in 2008 when gold crashed by 29.5% in seven months. (Over the next three years it went up 166%.)

From its peak in 2011, Bitcoin crashed as much as 96%. [Source]

While this sounds like a lot, it was just a decline from $32 to $2. These days a thirty-dollar blip wouldn’t even register for most Bitcoin investors.

Here’s a five-year chart of the price of Bitcoin.

Note the crash to $3,400 on January 1st, 2019.

Crashes, as you see, are not an uncommon thing for Bitcoin. Long-term holders have always won by just ignoring the price-movements. While this might be feasible for someone with a small position, movements like this are unacceptable to most accredited investors.

“A crowding out of gold as an ‘alternative’ currency implies big upside for Bitcoin over the long term,” JPM strategists said. And “a convergence in volatilities between Bitcoin and gold is unlikely to happen quickly and is in our mind a multiyear process. This implies that the above-$146,000 theoretical Bitcoin price target should be considered as a long-term target, and thus an unsustainable price target for this year.”

They see it as a long-term thing. Bitcoin infrastructure and acceptance are growing every year. Some users see the digital currency replacing all forms of fiat currency one day. This is a scary thought for central banks.

“The valuation and position backdrop has become a lot more challenging for Bitcoin at the beginning of the New Year,” JPM strategists wrote. “While we cannot exclude the possibility that the current speculative mania will propagate further pushing the Bitcoin price up toward the consensus region of between $50,000-$100,000, we believe that such price levels would prove unsustainable.”

It sounds like a fantastic long-term investment, but don’t lose your password. This guy is reportedly sitting on 321 million in Bitcoin.

Warren Buffet, a man who often says he doesn’t invest in tech because he doesn’t understand it, launched another missile at Bitcoin this week, calling it “rat poison.” [Source]

This reminds me of that time I wandered into a Chinese grocery store. There were buckets of fish for sale. Live crabs. Seaweed-flavored potato chips. Ramen noodles so spicy they’d blow your head off.

I bought a bunch of stuff, and took it home to try it.

I hated everything. It was either bland, or had a funky smell. Nothing tasted right. In the end I just gave it all away to my neighbor, an old South Korean woman who couldn’t understand why I didn’t like it.

The grocery store was a booming business. It was literally packed with people. The fact that I didn’t like the food, or understand why anybody would eat it, doesn’t mean that the grocery store as a bad business. It just wasn’t a good fit for me.

If I called it “rat poison” that would be silly. Warren Buffet is clearly wrong on this one. Bitcoin has been steadily increasing in value since its inception. Bitcoin acceptance and use is only getting stronger. It’s not for him, but that doesn’t mean he should insult it.

Make way for progress!

Like Marty Hart said in True Detective, “Old men die and the world keeps spinning.”