JPMorgan Sees Bitcoin as a Real Alternative to Gold

The strategists of the American megabank believe that Bitcoin has a long-term chance of reaching a price of $146,000. However, the cryptocurrency should become a good alternative to gold. But how does JPMorgan base this assumption? Let’s find out!

How Much Gold Is There Worldwide?

In fact, the current estimates are that a total gold stock is 244,000 tons. Almost 77 percent, or 187,000 tons, of all gold stocks, have already been mined. The remaining 23% or 57,000 tons of gold will be mined in the future. These figures are based on the current situation. With the ongoing development of location and mining methods, it’s theoretically possible that: 

  • additional gold reserves can be found, 
  • precious metal can also be mined in remote locations.

Each ton of gold equals 32,000 ounces. This corresponds to a total of 5.984 billion ounces of gold worldwide. The current gold value per troy ounce is $1,950. Based on these numbers, the implied market capitalization of the global gold supply is currently approximately $11.67 trillion. This corresponds to almost 20 times the current market cap of Bitcoin.

If you only look at gold investments in the private sector, the market capitalization of the precious metal is around 4.6 times higher than Bitcoin’s.

JPMorgan Believes in Bitcoin’s Success 

Nevertheless, strategists at the American multinational megabank JPMorgan Chase & Co. predict a possible scenario in which Bitcoin can seriously take on its role model. On Jan. 5, a Bloomberg report cited a note from the bank’s strategists, led by Nikolaos Panigirtzoglou. They demonstrate how total private sector investment in buying Bitcoin can reach the value currently invested in gold. The gold investments are in either exchange-traded funds or bars and coins.

The JPMorgan strategy team emphasized that such a path crucially depends on the approximation of Bitcoin volatility to gold. However, it seems to take some time.

In light of this persistent volatility, JPMorgan strategists identified strong positive signs for the cryptocurrency. However, they warned that it will be difficult to analyze the investment landscape over the medium term.

Bitcoin still has a long way to become digital gold. However, according to statements of the strategists at JPMorgan, BTC will be supported. Moreover, they are convinced that Bitcoin will overpower gold as a precious metal in the near future.

As institutional investors continue to invest in the cryptocurrency, the market volume may increase in the coming months or years. Once the total market cap of Bitcoin reaches several trillion US dollars, the market could have the necessary liquidity for large investors. Thus, it will be possible to invest billions in Bitcoin or swap them back for other assets. 

Will Bitcoin be able to become digital gold? What do you guys think? Feel free to share your thoughts in the comments!

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