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According to JPMorgan strategists, the rise in gold prices and the halving event planned for Bitcoin
Bitcoin is currently trading at $26,780 at the time of writing and has risen above its 50-day MA.
Bitcoin and Gold Correlation!
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Bitcoin is shown in blue and Gold is shown in yellow in the above chart.
Bitcoin and gold are generally considered alternative investments by investors and have shown a tendency to move in the same direction.
Given this, JPMorgan analysts suggest that the current price of gold at around $2,000 per ounce could push the price of Bitcoin up to $45,000. This assumption is based on the idea that BTC will reach a similar position to gold in private investor portfolios.
JPMorgan used the following statement in a note:
“With the current price of gold above $2,000, the value of investment-held gold outside central banks is currently around [$3 trillion]. Assuming Bitcoin will equal gold in private investor portfolios, venture capital or [volume]-adjusted terms implies a Bitcoin price of $45,000.”
A key factor contributing to JPMorgan’s optimistic estimate is the upcoming Bitcoin halving event scheduled between April and May 2024. The halving mechanism slows down the production rate of new Bitcoins, effectively doubling the production cost.
JPMorgan strategists believe that this event will raise Bitcoin’s production cost to around $40,000 and push the price upwards.
JPMorgan extrapolates from historical data the bullish trajectory observed during the previous halving events in 2016 and 2020. These events occurred with significant increases in Bitcoin prices, indicating the potential for a similar outcome after the next halving.
As a result, JPMorgan sets an upper limit of $45,000 for BTC, indicating limited potential beyond the increase resulting from the doubling of production costs.
What to Expect from Ethereum (ETH)?
While Bitcoin stands out in JPMorgan’s prediction, the bank suggests that Ethereum (ETH) may experience some selling pressure in the near future, beyond the Shanghai update until mid-year. JPMorgan expects Ethereum to show “slightly less performance” compared to BTC during this period.
However, it is important to note that Ethereum’s performance depends on market dynamics and technological developments.
Regardless of JPMorgan’s estimate, BTC is currently on an upward trend and is experiencing an increase. In the last 24 hours, Bitcoin has seen an increase of more than 2%, while a decrease of 1.2% has been recorded over the past seven days.