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JPMorgan: Recent Decline in Bitcoin (BTC) Volatility Is Turn-on to Institutional Investors

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by Steve Muchoki · 3 min read
JPMorgan: Recent Decline in Bitcoin (BTC) Volatility Is Turn-on to Institutional Investors
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JPMorgan highlighted that Bitcoin is becoming more appealing to institutional investors who are seeking low-correlation assets to diversify their investment portfolios. 

JPMorgan Chase & Co (NYSE: JPM) in a note to clients on Thursday noted that a recent decline in Bitcoin (BTC) volatility could boost its adoption by institutional investors. A boost in institutional adoption of bitcoin is “likely to arise from the recent change in the correlation structure of bitcoin relative to traditional asset classes,” the bank explained.

Institutional investors are likely to adopt Bitcoin as an alternative to Gold as the asset reduces the level of market corrections. However, it is worth noting that Bitcoin has recorded volatility of 86% in the past three months in comparison to Gold that recorded 16%.

As a result,  Bitcoin’s market price could rally to $130,000 if the volatility keeps low, the bank noted. JPMorgan has reduced its Bitcoin price call from $146,000, which was based on a long-term target.

In the recent report, JPMorgan highlighted that Bitcoin is becoming more appealing to institutional investors who are seeking low-correlation assets to diversify their investment portfolios.

JPMorgan Call on Bitcoin

The bank used the notion that Bitcoin’s recent decline in volatility is approaching that of gold. Moreover, institutional investors are seeking a better-returning asset that has minimal risks, where Bitcoin comes in.

The current price target is advised on the fact that a huge demand for Bitcoin by institutional investors who have invested in Gold will occur in the near future. “Considering how big the financial investment into gold is, any such crowding out of gold as an ‘alternative’ currency implies big upside for bitcoin over the long term,” JPMorgan said.

A further rally of approximately 122% from the current market price could match the total private sector investment into the gold market, according to JPMorgan.

Bitcoin has been slowly eating from the Gold global market as a safe haven. Since the onset of the coronavirus pandemic, Bitcoin has proved to be a better store of value over time than Gold did. Notably, Bitcoin has rallied over eight times whilst its counterpart has not done half of it.

The constant uptrend in Bitcoin price has attracted institutional investors including Tesla, and MicroStrategy that have added the asset to their balance sheet.

Bitcoin was trading around $59,486.45 according to CoinGecko while Gold was trading around $1729 according to market data provided by TradingView. Notably, Bitcoin’s market capitalization was $1,110,710,118,128, whilst Gold was almost ten times higher.

While Bitcoin remains with a fixed supply of 21 million, Gold on the other hand has an unknown supply. Furthermore, it is yet to be discovered if Gold mining from space is possible, which could eventually flood the Gold market.

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Steve Muchoki

A financial analyst who sees positive income in both directions of the market (bulls & bears). Bitcoin is my crypto safe haven, free from government conspiracies. Mythology is my mystery! "You cannot enslave a mind that knows itself. That values itself. That understands itself."

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