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Source: Financial Association
Author: Pure Bian
Original title: “Bitcoin will rise to $650,000? JPMorgan Chase called out such a sky-high price
According to the Financial Associated Press (Shanghai, editor Bian Chun) , the price of Bitcoin continued to hit a record high over the past weekend, breaking the US$24,000 mark. However, in JPMorgan Chase’s view, Bitcoin’s rally has just begun, there is still considerable room for growth, and nothing can stop the cryptocurrency from rising.
A global pandemic has changed the investment landscape in 2020, with different asset classes “a few happy and a few sad”. From the perspective of traditional assets, gold, US stocks, and bonds are undoubtedly the big winners behind the epidemic. In contrast, real estate trust investment funds (REITs) and commodities have experienced a bleak year.
Nikolaos Panigirtzoglou, a flux strategist at JPMorgan, wrote in his annual review that the most noticeable increase in 2020 is total outstanding debt, which increased by approximately US$14 trillion in the first half of 2020, and is expected to increase in total in 2020 21 Trillions of dollars. This particularly reflects the continued strength of the bond market (the increase in bonds is approximately US$13 trillion). Not only has government debt increased substantially, but corporate bond issuance has also reached a record level.
As an emerging asset, Bitcoin has also achieved a dazzling performance. In fact, not only in 2020, but Bitcoin is one of the best performing assets in the past decade.
JPMorgan Chase pointed out that “alternative’currencies’ such as gold and bitcoin are the main beneficiaries of the epidemic, and their prices have increased by 27% and 227%, respectively.
But what is absolutely striking is that despite the huge returns generated by Bitcoin, the change in market value is quite small. As shown in the figure below: The market value of bonds has increased by 13.1 trillion US dollars this year, and the market value of stocks has increased by 11 trillion US dollars. However, Bitcoin has achieved an amazing performance with a market value of only 300 billion US dollars, rising to 24,000 US dollars. Historical high point. In contrast, gold, whose price performance is much inferior to Bitcoin, has also increased its market value by $500 billion this year.
Bitcoin has always been regarded as digital gold, and there have been recent calls that the cryptocurrency will replace gold. At present, the total value of gold on the ground is about 12 trillion U.S. dollars, which is more than 27 times higher than the historical peak of the Bitcoin market value of 443 billion U.S. dollars. In short, if the market value of Bitcoin is to be compared with gold, then the price of a Bitcoin must rise from the current $24,000 to $650,000.
Institutional interest brings rising “energy”
Panigirtzoglou believes that at the current rate of agency entry, $650,000 is likely to be realized soon. The reason is that there is too much institutional “momentum” (purchasing momentum) on the market now.
The strategist recently pointed out that the entry of Massachusetts Mutual Life Insurance, a 169-year-old company, marks another milestone in the acceptance of Bitcoin by investors, highlighting that institutional demand for Bitcoin may increase in the next few years. Earlier, Vantone Life Insurance Company disclosed that it had purchased $100 million worth of Bitcoin for its general investment fund, becoming the latest mainstream company to set foot in cryptocurrency assets.
JPMorgan Chase strategists headed by Nikolaos Panigirtzoglou pointed out in a report that this $100 million investment shows that the acceptance of Bitcoin is spreading from family offices and wealthy investors to insurance companies and pension funds. Although insurance and pension fund institutions are unlikely to deploy Bitcoin on a large scale, even a small switch to Bitcoin may have a major impact. Strategists stated that if pension funds and insurance companies in the United States, the Eurozone, the United Kingdom, and Japan allocate 1% of their assets to Bitcoin, this will increase the demand for Bitcoin by $600 billion.
After the news that Vantone Life Insurance entered Bitcoin, Bitcoin ushered in a round of speculative buying last week. Last Thursday, Bitcoin futures trading volume hit a record high. At the same time, open positions increased substantially. In fact, since last Friday, the Chicago Mercantile Exchange (CME) Bitcoin futures open position has increased by a staggering 45%, reaching a new high of $1.4 billion.
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