Bitcoin Could Hit $45,000, Says JPMorgan

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Strate­gists at JPMor­gan, led by Niko­laos Pani­girt­zoglou, have report­ed­ly sug­gest­ed that the ris­ing price of gold could imply a Bit­coin price of $45,000. The two assets, often seen as alter­na­tives by investors, tend to move in tandem.

Accord­ing to a report by The Block, the cur­rent gold price, near­ing $2,000 per ounce, would sug­gest a Bit­coin price of $45,000, giv­en the val­ue of gold held for invest­ment pur­pos­es out­side cen­tral banks is cur­rent­ly around $3 tril­lion. The strate­gists pro­pose that this could lead to Bit­coin equal­iz­ing gold in pri­vate investors’ port­fo­lios in risk cap­i­tal or vol­ume-adjust­ed terms.

How­ev­er, JPMor­gan con­sid­ers the $45,000 Bit­coin price as an upper lim­it, indi­cat­ing the lim­it­ed poten­tial for the asset beyond the increase dri­ven by the dou­bling of min­ing or pro­duc­tion costs. The upcom­ing Bit­coin halv­ing event, expect­ed in April or May 2024, would mechan­i­cal­ly dou­ble Bitcoin’s pro­duc­tion cost to around $40,000. His­tor­i­cal­ly, Bitcoin’s pro­duc­tion cost has act­ed as an effec­tive low­er bound, with pre­vi­ous halv­ing events in 2016 and 2020 accom­pa­nied by a bull­ish tra­jec­to­ry for Bit­coin prices, as not­ed by The Block.

The Bit­coin halv­ing event occurs approx­i­mate­ly every four years and reduces the reward for min­ing new Bit­coin blocks by half, effec­tive­ly decreas­ing the rate at which new bit­coins are cre­at­ed to con­trol infla­tion and main­tain scarcity.

JPMor­gan assumes a 25% return on Bit­coin over the next 12 months, a time­frame that cap­tures the expect­ed 2024 halv­ing event. How­ev­er, the bank expects Ethereum (ETH) to some­what under­per­form Bit­coin in the near term, beyond the Shang­hai upgrade until mid-year, as report­ed by The Block.

Despite these pre­dic­tions, JPMor­gan main­tains a cau­tious stance on dig­i­tal assets, cit­ing poten­tial head­winds from the U.S. reg­u­la­to­ry crack­down, dis­rup­tions to cryp­to bank­ing net­works, and the ongo­ing reper­cus­sions from the FTX exchange col­lapse. As of the time of writ­ing, Bit­coin is trad­ing at around $26,823 (up 1.79% in the past 24-hour peri­od) and Ethereum is trad­ing at about $1,832 (up 1.85% in the past 24 hours).

Fea­tured Image Cred­it: Pho­to / illus­tra­tion by “petre_barlea” via Pix­abay

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