According to the American investment bank, bitcoin is becoming more attractive to institutions hunting for low-correlation assets that enable them to diversify their portfolios, Business Insider said.
Previously, regular large swings of bitcoin’s price acted as a “headwind towards further institutional acceptance,” JPMorgan disclosed, but the interest has recently been “rejuvenated.”
Among the largest obstacles to institutions adopting bitcoin has been its high volatility, which ballooned last year as the crypto grew more than 300 percent.
Bitcoin has been hovering near the $60,000 level again this week, as investors wonder how high the crypto can go. Price targets range from the conservative to the nearly incredible, but it’s worth remembering that today’s bitcoin prices around $59,500 used to sound preposterous as well.
Meanwhile, analysts pointed out that bitcoin’s “digital gold” narrative continues to gain interest. For instance, precious metal like gold has witnessed $20 billion in capital outflows since October last year while investments in bitcoin soared by $7 billion during the same timeframe.
Indications that bitcoin’s volatility is easing could see the crypto “crowding out” the yellow metal as a portfolio diversifier and suggests a long-term price target of $130,000, according to JPMorgan’s note.
“Given how large the financial investment into gold is, any such crowding out of gold as an ”alternative” currency means big upside for bitcoin over the long term,” Markets Insider quoted JPMorgan as saying in its research note.
The potential catalyst of a bitcoin ETF (exchange-traded fund) is also looming on the horizon, and with it, the potential for a major surge in retail traders investing into crypto through investment vehicles, Investor Place said.
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