The present gold price of nearly $2,000 per ounce would imply a Bitcoin (BTC) price of $45,000, reports by JPMorgan analysts, as the two assets tend to move in tandem and are seen as alternatives by investors.
“With the gold price growing over $2,000, the value of gold held for financing objectives outside central banks is as of now valued at around [$3 trillion]. As a result, this means a $45,000 price for Bitcoin (BTC) under the assumption that Bitcoin (BTC) equalizes gold in private investors’ portfolios in danger financial resources or [volume]-adjusted terms,” JPMorgan strategists led by Nikolaos Panigirtzoglou wrote in a note on Wednesday.
JPMorgan considers the $45,000 Bitcoin (BTC) price as an upper limit, indicating limited potential for the investment beyond the increase driven by the doubling of mining or production costs. The next Bitcoin (BTC) halving in April or May 2024 would mechanically double Bitcoin’s production cost to around $40,000, reports by JPMorgan. “This is because bitcoin’s production cost has historically acted as an effective lower bound,” JPMorgan strategists stated. ” Nonetheless, the previous halving events of 2016 and 2020 were accompanied by a positive tendency trajectory for Bitcoin (BTC) prices that had accelerated post the halving event.”
The Bitcoin (BTC) halving is an event that occurs approximately every four years, reducing the reward for mining new Bitcoin (BTC) blocks by half, effectively decreasing the price at which new bitcoins are created, to be able to control inflation and maintain the scarcity of Bitcoin (BTC) over time. The next Bitcoin (BTC) halving will see the block reward halve from 6.25 Bitcoin (BTC) to 3.125 bitcoin.
JPMorgan assumes a 25 percent return on Bitcoin (BTC) over the following 12 months, as this timeframe captures the halving event expected next year.
JPMorgan on ETH
Ether (ETH) may continue to face some selling pressure in the near term beyond the Shanghai upgrade till mid-year or so, reports by JPMorgan. “We thus expect Ethereum (ETH) to somewhat underperform Bitcoin (BTC) over the near term,” the bank said.
In general, JPMorgan retains its cautious stance on digital assets as headwinds from the United States regulatory crackdown, disruptions to cryptocurrency banking networks and the ongoing repercussions from the FTX Trading Ltd exchange collapse are likely to delimit any potential gains.
Bitcoin (BTC) is as of now currently worth around $26,500 and ether at about $1,800, reports by The Block’s Data Dashboard.