The widespread acceptance of the flagship crypto, Bitcoin, as a store for value is having a direct impact on the popular safe-haven asset, gold.
Thus, it is setting the stage for a major change in institutional asset allocation between the two, according to experts at America’s biggest bank JPMorgan Chase.
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Highly revered JP Morgan Chase analyst, Nikolaos Panigirtzoglou, anticipated that gold prevailing fundamentals could turn global investors away from it and increase their inflows to Bitcoin in a matter of few years, leading to a large divergence in price between Bitcoin and Gold.
JP Morgan chase acknowledged that although Bitcoin accounts for 0.18% of assets held by the world’s elite that include their family offices, compared with 3.3% for gold ETFs, which gave further insights that only a small reallocation from gold to Bitcoin could change the status quo for the yellow metal.
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What they are saying
America’s most valuable bank, JPMorgan Chase, also spoke on why it believes the odds are with Bitcoin to keep rising in value.
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- “Even a modest crowding out of gold as an ‘alternative’ currency over the longer term would imply doubling or tripling of the bitcoin price,” JPMorgan Chase said.
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And over time, Bitcoin could be held for other reasons such as for making payments, not just for being a store of wealth as gold is, according to JPMorgan Chase
- “Cryptocurrencies derive value not only because they serve as stores of wealth but also due to their utility as a means of payment. The more economic agents accept cryptocurrencies as a means of payment in the future, the higher their utility and value,” JPMorgan Chase explained.
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What this means
In a press release to clients that was obtained by Bloomberg, the bank said:
“The adoption of bitcoin by institutional investors has only begun, while for gold, its adoption by institutional investors is very advanced. If this medium to longer-term thesis proves right, the price of gold would suffer from a structural headwind over the coming years.”
In the short term though, “there’s a good chance that Bitcoin prices have overshot and gold is due for recovery”, the U.S elite bank added.
READ: Bitcoin on high demand, hits 2-year high, trading $17,000
What you should know
Nairametrics, some weeks ago, revealed America’s biggest bank, JP Morgan Chase, released a statement on the world’s flagship crypto, where it said that Bitcoin has what it takes to challenge gold’s status as the go-to alternative financial asset.
- When compared to other financial assets like gold and crude oil, Bitcoin looks relatively small, considering that it has a market capitalization of $242 billion, compared to the precious metal’s (Gold) $2.6 trillion market value.
- However, this means the crypto has more room for upside and can potentially compete with gold as the preferred alternative currency.
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