The investment bank JPMorgan sees three main reasons for Bitcoin’s high growth potential
The $316 billion investment bank JPMorgan describes the long-term potential of Crypto Profit as „considerable“. This new optimism opposite the market-leading crypto currency comes only short time after the large payment service provider PayPal announced to want to take up crypto currencies to the own service offer.
The main reason given by JPMorgan’s Global Market Strategy Department for its confident assessment is the competition between Bitcoin and Gold. The business insider has a letter from the investment bank to this effect:
„Bitcoin’s long-term potential is considerable as it increasingly competes with gold for status as an ‚alternative‘ currency, as the millenials (younger generations) become an increasingly important part of the investment market over time.
In this context, analysts also point to the currently still massive difference in the market values of Bitcoin and gold. Thus the market capitalization of gold from exchange traded funds (ETFs) to gold bars amounts to at least 2.6 trillion euros. US dollars, while Bitcoin only reaches 240 billion US dollars. The crypto-currency therefore still has plenty of room to grow, if it really does catch up with the precious metal in the favor of investors.
JPMorgan names three main reasons
The letter from JPMorgan identifies a total of three main reasons for Bitcoin’s long-term growth potential.
Firstly, as just mentioned, Bitcoin would have to grow by a factor of just under 10 to achieve the same market value as gold; secondly, crypto-currencies have a very high usability; and thirdly, BTC could be very popular with younger generations in the long run.
The recent entry of PayPal into the crypto market and the rapidly growing interest of institutional investors shows that Bitcoin is indeed increasingly perceived as a gold style hedge.
There is currently still a massive difference between the crypto currency and the precious metal in terms of market value, but gold has been used as a store of value and a means of protection for a long time. However, Bitcoin has unique advantages that make even JPMorgan analysts optimistic about the crypto-currency’s chances in a duel.
One such advantage is the usability of Bitcoin. The crypto currency is based on a block chain, which in turn means that its users can efficiently and easily send the financial product to each other via this network. In order to transfer gold, however, it requires the physical exchange of the precious metal, which is often only possible at great expense.
Accordingly, it is much easier to transfer USD 1 billion in capital in Bitcoin via a block chain than to move the same amount in gold. In this respect, the analysts of the investment bank explain further:
„Crypto-currencies do not only get their value from the fact that they act as a store of value, but also from the fact that they are a means of payment. The more the economy accepts crypto currencies in the future as means of payment, the higher their usability and value.
How great is the potential?
In many ways, Bitcoin is still in its infancy, and as Cointelegraph reported, only just under 7% of Americans have ever bought Bitcoin.
Besides it is missing in many countries still at a clear Krypto regulation, why financial institutions refrain so far from keeping crypto currencies or to take up these at all to their service offer. Biticoin has in the next five to ten years thus still much area to grow, which makes a comparable market value as gold quite conceivable.