JPMorgan Says Bitcoin Could Surge to $146,000 in Long Term

JPMorgan Chase & Co. sees Bitcoin as a future competitor of gold as an asset class, with the long-term potential to reach $146,000, Bloomberg reports.

Why It Matters: It would be quite the climb for Bitcoin, which rallied to a record $34,000 before retreating a bit on Monday. But it’s a long way off, if anything. Private investment in Bitcoin would have to grow at a multiple of nearly five to match the investment in gold via ETFs or bars and coins.

But a healthy future for Bitcoin depends on its volatility coming down to gold’s level, encouraging more institutional investment.

  • A group of strategists led by Nikolaos Panigirtzoglou said this could be a “multiyear process.”

Key Numbers (From CoinMarketCap):

  1. Bitcoin’s Market Capitalization: $592 Billion
  2. Bitcoin’s Circulating Supply: 18,600,000 Tokens
  3. Bitcoin’s Current Price (9:00 a.m. ET): $31,701.10

As prices continue to improve and volatility appears to stabilize, more institutions and noted investors are getting involved or expressing interest. But a heated debate over Bitcoin remains:

  • “While some argue that the cryptocurrency offers a hedge against dollar weakness and inflation risk in a world awash with fiscal and monetary stimulus, others say retail investors and trend-following quant funds are pumping up an unsustainable bubble.”

The Future, For Now: JPMorgan anticipates headwinds for the digital currency, with indicators “like a buildup of speculative long positions and an increase in investment wallets holding small amounts of Bitcoin showing potential froth.”

Bitcoin rose 1.7% to $31,567 as of 10:31 a.m. in London. The wider Bloomberg Galaxy Crypto Index added 0.9%. On Monday, Bitcoin slid as much as 17%, the biggest drop since March, after breaching $34,000 for the first time over the weekend. The swings are a reminder of the famed volatility of the largest cryptocurrency, whose price has more than quadrupled over the past year.

Bitcoin has the potential to reach $146,000 in the long term as it competes with gold as an asset class, according to JPMorgan Chase & Co. Bitcoin’s market capitalization of around $575 billion would have to rise by 4.6 times — for a theoretical price of $146,000 — to match the total private sector investment in gold via exchange-traded funds or bars and coins, strategists led by Nikolaos Panigirtzoglou wrote in a note. But that outlook depends on the volatility of Bitcoin converging with that of gold to encourage more institutional investment, a process that will take some time, they said.

“A crowding out of gold as an ‘alternative’ currency implies big upside for Bitcoin over the long term,” the strategists wrote Monday. However, “a convergence in volatilities between Bitcoin and gold is unlikely to happen quickly and is in our mind a multiyear process, according to Bloomberg. 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.”

More institutions and noted investors, from Paul Tudor Jones to Scott Minerd and Stan Druckenmiller, have either started allocating funds into Bitcoin or have said they’re open to doing so. While some argue that the cryptocurrency offers a hedge against dollar weakness and inflation risk in a world awash with fiscal and monetary stimulus, others say retail investors and trend-following quant funds are pumping up an unsustainable bubble.

For now, JPMorgan sees headwinds for the largest cryptocurrency, with indicators like a buildup of speculative long positions and an increase in investment wallets holding small amounts of Bitcoin showing potential froth. “The valuation and position backdrop has become a lot more challenging for Bitcoin at the beginning of the New Year,” the 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.”

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Here’s Why Peloton Stock Is Soaring 10% Today

Peloton is reducing the price of its flagship bicycle and adding two new products—it’s the first major expansion for the fitness giant, which has seen its stock surge nearly 200% since the beginning of the pandemic as demand for home fitness equipment skyrocketed.

Peloton currently sells a stationary bike and a treadmill, plus a $39 monthly subscription service for live and pre-recorded classes that reached one million subscribers in May. 

Peloton will reduce the price of its current stationary bike model to $1,895 (starting Wednesday) and introduce a new $2,495 bike (available Wednesday) and a $2,495 treadmill (available in 2021); Peloton’s current treadmill model, priced at $4,295, will still be available. 

The hope is that the new, cheaper price will make Peloton’s product more accessible and the upgraded bike, which will come with a handful of new features like a screen that pivots for off-bike workouts, will capture the high-end market. 

On Friday, JPMorgan raised its price target for Peloton from $59 to $109, citing strong continuing demand for home fitness products because of the pandemic. 

Peloton’s stock jumped 10% on Tuesday morning and is currently trading at $89. 

Crucial quote

“Our goal is to be the go-to at-home fitness solution for as many people as possible,” Peloton CEO John Foley said in a statement, “and with these new product launches, we’ll be able to offer access to Peloton’s best-in-class fitness content at various price points, depending on what consumers are looking for, especially in a world where people are increasingly working out at home.”

What to watch for

Peloton reports quarterly earnings on Thursday. In the last quarter, the company reported $524.6 million in revenue, a 66% bump, and a net loss of $55.6 million. 

Tangent

Apple is also working on a digital fitness subscription service to compete with Peloton, but analysts say it’s unlikely that the new product will be able to derail Peloton’s popularity and demand, primarily because Peloton’s product includes a physical exercise machine alongside the digital product. 

Further reading

Citi Boosts S&P 500 Target, Says Federal Reserve Will Do ‘Whatever It Takes’ To Prevent Another Market Crash (Forbes)

Peloton Bike+ Adds Four Crucial Features, One Just For Apple Watch Owners (Forbes)

Earnings Preview: What To Expect From Peloton On Thursday (Forbes)

Could Competition From Apple Derail Peloton? Not So Fast, Analysts Say (Forbes) Follow me on Twitter. Send me a secure tip.

Sarah Hansen

 Sarah Hansen

I’m a breaking news reporter for Forbes focusing on economic policy and capital markets. I completed my master’s degree in business and economic reporting at New York University. Before becoming a journalist, I worked as a paralegal specializing in corporate compliance.

Source: Forbes

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