Bitcoin’s decrease in volatility has made it attractive to investors that are looking for low-correlation assets to diversify their portfolios
JP Morgan has stated that Bitcoin’s decrease in volatility is making it more attractive to institutional investors.
Bitcoin’s price volatility, which will be discussed in our next AIBC Summit, has decreased in recent weeks and has subsequently become more attractive to investors seeking low-correlation assets to diversify their portfolios. This is encouraging news for Bitcoin enthusiasts and early adopters of the cryptocurrency as Bitcoin’s major barrier to many was the volatility factor.
JP Morgan said that the recent changes may increase bitcoin adoption and the global also evaluated how much Bitcoin must cost to reach the level of gold investments in the private sector:
“The recent change in the correlation structure of bitcoin relative to traditional asset classes. Mechanically, the bitcoin price would have to rise [to] $130,000, to match the total private sector investment in gold.”
JP Morgan also believes that once bitcoin’s volatility is in line with gold’s volatility, then the long-term price goal would be $130k, adding:
“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.”
This new estimate is lower than their initial prediction of $146,000 due to the fall in price of gold.
“The decline in the gold price since then has mechanically reduced the estimated upside potential for bitcoin as a digital alternative to traditional gold, assuming an equalization with the portfolio weight of gold.
A convergence in volatilities between bitcoin and gold is unlikely to happen quickly and is likely a multi-year process. This implies that the above $130,000 theoretical bitcoin price target should be considered as a long-term target.”
JP Morgan bitcoin’s price is based on the bank’s expectation that gold and bitcoin’s volatility will become close but there is still a long way to go as Bitcoin’s volatility stands at 86% while gold is at 16%. This is a long term target but one that is looking likely.
About AIBC Dubai:
AIBC UAE will take place on the 25th to 26th May, 2021, in the emirate of Dubai. The event will bring together key brands and individuals from the converging sectors of AI, blockchain, IoT, Quantum Tech to discuss and shape the future of emerging tech.
It is one of the leading events globally for blockchain, AI, crypto, and other emerging technologies, and gathers together an elite selection of delegates, policymakers and thought leaders from across the globe. Such international recognition has helped propel AIBC Summit become a favourite on the world circuit for emerging tech conferences and expos.