JP Morgan, the investment banking giant, once didn’t like Bitcoin, or at least its CEO Jamie Dimon didn’t. Now things have gone full circle. A new report from the bank says that Bitcoin (BTC) has a potential long-term upside. It’s interesting that this statement comes hot on the heels of PayPal allowing its users to buy and sell crypto.
The report form JP Morgan’s Global Markets Strategy division compares BTC with gold. It says:
“The potential long-term upside for bitcoin is considerable if it competes more intensely with gold as an ‘alternative’ currency we believe, given that Millenials would become over time a more important component of investors’ universe.”
Three reasons Bitcoin could become bigger than gold
In effect it points out three reasons for the emergence of a Bitcoin bull market, and support long-term growth potential.
The first one is that investment in BTC has to rise tenfold to match private sector gold investment. To put that in context, at least $2.6 trillion is said to be stored in gold exchange-traded funds (ETFs) and bars, while the market capitalization of BTC remains at $240 billion.
Second, cryptocurrencies have a high utility factor. Gold has to be stored and transported physically, whereas Bitcoin and other crytpocurrencies can be transferred via a public ledger, and that is more efficient as well as safer. The report’s analysts said: “Cryptocurrencies derive value not only because they serve as stores of wealth but also due to their utility as means of payment. The more economic agents accept cryptocurrencies as a means of payment in the future, the higher their utility and value.”
Third, BTC is likely to appeal to Millennials in the long-term. Moreover, it is thought that the move by PayPal to allow purchases using crypto, means that it is being increasingly viewed as a safe haven asset, a status traditionally given to gold.
How long might it take for BTC to close the gap with gold? It could be some time, as BTC is still in early stages in terms of infrastructure, development, and mainstream adoption. However, the PayPal initiative may well have a strong influence on adoption by encouraging confidence in digital assets.